by Scott McClallen
Suspension of Michigan’s 6% sales tax on gasoline through March 1, 2023 has been proposed by Senate Minority Leader Jim Ananich.
The bill is in response to record gas prices caused by inflation and international conflict that brought trade restrictions. Gas prices, less than $3 a gallon just over a year ago, have soared past $4 per gallon.
“Gas isn’t a luxury item; it’s something almost every single one of us needs to go about our daily business,” the Democrat from Flint said in a statement. “When driving becomes cost-prohibitive, it forces folks to make tough decisions about whether they can afford to spend an hour running errands and driving kids to sports practices, visit a relative who needs help, or take that long-awaited weekend road trip up north. So the way I see it is that providing relief to folks now is a requirement, not an option.”
Senate Bills 984, 985, and 986 aim to remove the state’s 6% sales tax on gasoline. A committee hasn’t yet vetted the bills.
So how would a removed 6% gas sales tax look? Filling up an SUV with 16.5-gallons for $4.16 per gallon would cost $72.75 usually, but without the sales tax, it would cost $68.64.
“Leaders of every stripe agree that we can and should take action now to ease the sting of high gas prices,” Ananich said. “When the state budgeted for gas sales tax revenue for this fiscal year, gas prices were expected to be an average of $2.83, and prices have been much higher than that. That means the state is sitting on a windfall of unexpected revenue, which we should use to help keep money in folks’ pockets.”
Michigan residents currently pay three taxes on gasoline: an 18.4 cents per gallon federal tax, a 27.2 cents per gallon state tax, and a 6% state sales tax.
Michigan political leaders have now pitched suspending all three within the last month.
First, Gov. Gretchen Whitmer and five other Democratic governors asked Congress to suspend the 18.4 cents per gallon federal tax. Then, the Michigan GOP asked Whitmer to cut the state’s 27.2 cents per gallon state tax for six months.
Whitmer has signaled she will veto the GOP’s plan, saying it would blow a hole in her $74.2 billion budget and slow fixing roads. However, Whitmer has supported suspending the 6% gas sales tax.
Under his plan, Ananich says motorists would save money as the per-gallon price of gas rises while the state could still use the remaining tax revenue to fix the roads.
“Our state budget situation is such that we have the flexibility to give families a break without depleting funds for roads, education, or other vital programs,” Ananich said. “I have every expectation that, with the other legislative leaders and the governor coming together, we will be able to hash this out and get it across the finish line as soon as possible.”
The bills were referred to the Senate Committee on Transportation.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
