Money Rolling Into Lansing from State License Plate Tax
Annual vehicle registration revenue up 24 percent since 1990, even after inflation
The amount of vehicle registration (license plate) tax the state collects from Michigan motorists each year is up 24 percent since 1990, even after factoring in inflation.
Revenue from the Motor Vehicle Registration tax rose from $420.2 million in 1990 to $943.5 million in 2014, according to the Senate Fiscal Agency. If expressed in 2014 dollars, the $420.2 million collected in 1990 would be equivalent to $761.1 million today. The amount actually collected last year represents a 24 percent increase in that figure.
This revenue stream will grow another 20 percent starting Jan. 1, 2017, thanks to a tax increase signed into law by Gov. Rick Snyder earlier this month as part of a road repair funding package. Higher vehicle registration tax rates will generate around $180 million in their first year. The House Fiscal Agency projects that this will rise to around $230 million in the 2020-21 fiscal year.
Even without the 20 percent hike, over the past five years tax revenues from vehicle registrations are up by $101.1 million. Part of that is explained by more vehicles on the road — an estimated 8.2 million in 2015. In 1990, there were 6.8 million vehicles registered to Michigan motorists.
"Vehicle Registration Fee revenue has grown faster than inflation due to real economic growth and a change in the mix of vehicles being purchased by consumers," said Terry Stanton, spokesman for the Treasury Department. "There are more vehicles on the road now than in 1990 due to population growth and an increase in the average vehicles per family. In 1990, cars were more popular to own than trucks, but over the last decade-plus, people purchase more SUVs and pickups, which are more expensive."
Sen. Rick Jones, R-Grand Ledge, said he thinks the revenue collected is tied to how well the state’s economy is doing.
“It is very logical to me that it is going to go up-and-down according to the economy,” Jones said.
In a good economy, people buy more cars. In a worse economy, some people get rid of extra cars, Jones said.
The state’s revenue collection on motor vehicle registration increased 13 years in a row from 1990-1991 to 2003-04, from $420.2 million to $934.3 million. In 2008, revenue dipped fell $90 million to $842.4 million before returning to the upward trend. From 2008-09 to 2013-14, the amount paid by vehicle owners statewide increased from $842.4 million to $943.5 million. That's a 12 percent increase in five years.
For comparison, gas and diesel taxes brought in slightly more than $1 billion last year.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.