Michigan bills would end tax exemptions for rolling stock

| 6/18/2007

An initiative in the Michigan House intends to give the state another avenue to collect taxes on the trucking industry.

In 1985, the state began providing interstate motor carriers domiciled in Michigan with a refund of sales and use taxes paid on rolling stock used in interstate commerce. The practice lasted until 1992 when a court decision rescinded the exemption status.

The exemptions were reinstated four years later because of concerns that Michigan-based trucking operations were at a competitive disadvantage with businesses domiciled in neighboring states that do not tax rolling stock.

A Democrat-led initiative in Lansing would once again eliminate the sales tax exemption for purchases of rolling stock by interstate trucking operations. Sponsored by Rep. Hoon-Yung Hopgood of Taylor, one bill would tax certain large trucks, trailers and related parts in proportion to their use in the state.

Rep. Barbara Farrah of Southgate has offered a separate bill that would end the exemption from use tax for the storage, use or consumption of rolling stock by interstate operations that drive at least 10 percent of its mileage outside the state.

Rep. Frank Accavitti of Eastpointe introduced another bill that would essentially tax rolling stock in proportion to its use in the state. Interstate trucking operations would get a credit against the sales and use taxes for sales or use tax paid on the purchase, rental, lease or use of rolling stock used in interstate commerce, based on miles driven outside Michigan.

The bills – HB4378, HB4379 and HB4380 – are in the House Tax Policy Committee.

– By Keith Goble, state legislative editor