Michigan Republicans offer sales tax holiday on fuel purchases

| 5/22/2008

Michigan is one of only nine states that collect a general sales tax on fuel purchases. With prices at the pump inching closer to the $5 per gallon mark in the state, Republicans at the statehouse say they have a plan to help consumers.

Two House Republicans unveiled an initiative to temporarily eliminate the 6 percent sales tax on fuel. The state’s fuel excise tax would not be affected.

A suspension of the sales tax would cost the state as much as $300 million through Labor Day. How a tax break or suspension would affect the status of the International Fuel Tax Agreement in Michigan is uncertain.

Reps. Rick Jones of Grand Ledge and Paul Opsommer of DeWitt say a summertime tax moratorium would save consumers about 25 cents per gallon at current prices.

“Our proposal will give Michigan residents much-needed tax relief at a time when oil companies continue to gouge people with impunity,” Jones said in a written statement.

To offset the lost revenue from the moratorium, advocates say the state’s budget surplus from a year ago could be tapped to protect essential programs, such as education. Spending cuts is another option, they say.

House Democrats, who hold the majority in the chamber, have tabbed the effort as political pandering in an election year. They also say there is no guarantee consumers would pay less at the pump.

Supporters acknowledge the tax break isn’t a “silver bullet.” They say Michigan must also take advantage of alternative energy sources to lessen the state’s dependence on foreign oil.

To view other legislative activities of interest for Michigan in 2008, click here.

– By Keith Goble, state legislative editor