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Wednesday, October 26, 2011

Gov. Rick Snyder wants to drop Michigan gas sales tax; state GOP leaders likely to oppose

Rick Snyder                                         Image via Wikipedia
Gov. Rick Snyder announced plans on October 25th on dropping Michigan’s sales tax charges on each gallon of gasoline and diesel fuel in favor of a tax on the wholesale price of fuel.

The restructure in Michigan’s fuel tax will be a major initiative in a speech the Governor will give Wednesday, October 26th at Lawrence Technological University in Southfield laying out ways to improve the state's roads, bridges, water and sewer systems, Internet access and regional transit.

The current wholesale tax of 6 or 7 cents per gallon initially wouldn't cost drivers any more initially than existing taxes. When inflationary pressure pushes up the price of fuel, the state would gain additional revenue to fix roads and bridges.
"We're not looking to have a windfall," Bill Rustem Senior Adviser to Governor Snyder stated to the Associated Press. 
"Everyone in the state recognizes we need to do a better job of maintaining our roads. ... It's all about making sure Michigan is competitive in the 21st century," he stated.
Gov. Snyder could another fight, similar to adding an additional international bridge to Canada within the Detroit area, in getting the tax switch through the Republican-controlled House and Senate.

Most GOP lawmakers have signed a "pledge" to not in any format raise taxes, so they'll have to be sure the fuel tax switch won't raise pump prices. Many drivers already are struggling to deal with gas prices that last week averaged $3.38 a gallon statewide, about 57 cents per gallon higher than last year at this time, according to AAA Michigan.
"The movement to a wholesale tax on fuel has been talked about previously and got little traction," Ari Adler spokesperson for House Speaker Bolger told The Associated Press.
"We are willing to review it with open minds, but we do have concerns. Among those are what happens to the current sales tax on gasoline — would that be applied to the wholesale price? Alder, questioned. 
“If so, that would be creating a tax upon a tax and we already have too much of that going on at the gas pump," he said.
Michigan’s current gas tax charges motorists 19 cents per gallon for gasoline and 15 cents per gallon for diesel fuel. Gasoline taxes were last raised in 1997. Michigan also collects a 6-cents-per-dollar sales tax on what motorists pay at the pump.

Some lawmakers have proposed dedicating that nearly $1 billion in annual sales tax revenue to roads, but Rustem said that isn't on Snyder's agenda now because the move would take away money from public schools.

Gov. Snyder moved an estimated $900 million dollars away from public K-12 schools and applied the funds to K-16 education, in contrast the will of Michigan voters in 1994 seeking to protect K-12 funding dollars with the passage of Proposal “A". 

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