Michigan considering fuel tax hike, again

May 20, 2009

Feeling the economic pinch of the recession, the Michigan legislature is considering a proposal to increase the excise tax on fuels across the board, including aviation fuel.

The proposal would change the calculation of excise tax on aviation fuel from the flat rate of three cents per gallon to a percentage of the wholesale price of a gallon—a move that would spike taxes with every fluctuation of oil and fuel prices. The excise fuel tax is added to the state’s 6-percent sales tax on aviation fuel that goes into the general fund for nonaviation uses. No other state has a percentage-based excise tax on avgas—and few others impose any sales tax.

“With the combination of the sales and excise taxes, Michigan pilots are already facing a particularly high tax rate on fuel—with very little of the money being reinvested into aviation,” said AOPA Vice President of Airports and State Advocacy Greg Pecoraro. “Increasing the rates even more, and moving toward a percentage-based excise tax, would be damaging to the aviation industry in a state already reeling from a weak economy.”

AOPA worked to quash a rushed effort to push through the tax at the end of last year’s legislative session and will continue to work with state leaders to keep the proposal from transferring a disproportionate tax burden onto pilots.