Although the price of gas is largely impacted by the worldwide supply of oil, federal and state gasoline taxes also play a role. Currently, the federal government charges a tax of 18 cents per gallon and a 24-cent tax on diesel fuel. Along with these federal taxes, many states charge a separate levy which range from zero in Alaska to 46-cents in California. Michigan has a relatively moderate gasoline tax, charging 19-cents per gallon, but Governor Rick Snyder has proposed that this be changed..
As Michigan has experienced its budget crisis over the last few years the amount of money and the percentage of the budget they have decided to spend on road repair has been increasingly cut. Although in the short term this plan makes sense, the governor and others are arguing there is only so long you can go without fixing Michigan's infrastructure without major problems.
The governor said "I have not met a Michigan Driver yet who is satisfied with the condition of our roads" -- an issue which he is trying to address by changing of the way Michigan taxes gasoline. The issue of road conditions is being further stressed because of the fact that if Michigan doesn't manage to raise and spend more money on its roads it risks losing almost half a billion dollars of federal funding for transportation and roads (Michigan gas-tax hike).
To deal with this possible loss of funds furthering the constraints placed on the limited budget, the governor has proposed a reform of Michigan's gasoline tax. His idea is to change the tax from a 19¢ tax per gallon to a percentage wholesale tax. The idea is as gas prices go up people consume less gas leading to lower profits for the stat, the idea of a wholesale tax would make revenue dependent on the price of gas instead of the amount of gas consumed leading the state to higher profits as the price of gas increased.
Although it seems the consumer would be hurt by this, "The price at the pump will be the same...It's not going to be a change in the experience for the driver", Bill Rustem, speaking for the governor, said (Huffington Post). The idea is that as gas prices rise the state will make more money but the percentage will be set at a point where it will not change the current price of gas for consumers. By setting the price so that it doesn't change current fuel prices the state is looking to increase their revenue as the price of gas goes up.
Although the consumer will have to spend more money in the end, the state promises they are not looking for a "windfall" and are only trying to increase revenue in order to be better able to maintain the state's infrastructure (Huffington Post). The proposal is being presented as a solution to the condition of roads in Michigan and the only other option at this time is for the people of Michigan to accept a lower quality of roads because the state simply cannot maintain the current conditions with the budget constraints it faces. This idea of taxation, along with other reforms the governor has proposed, is intended to fix the deterioration of road conditions in Michigan on the local as well as state level.