Michigan bills would end tax exemptions for rolling stock

| 10/8/2009

Truckers are all too familiar with efforts to dig into their pockets to help fill coffers. An initiative in the Michigan House is intended 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 The practice lasted until 1992 when a court decision rescinded the exemption status.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.

Rep. Shanelle Jackson, D-Detroit, has taken the lead in pursuing legislation that would call on Michigan truckers to pay even more taxes to the state.

Her first bill would once again eliminate the sales tax exemption for purchases of rolling stock by interstate trucking operations. The bill – HB5393 – would tax large trucks, trailers and related parts in proportion to their use in the state.

Company driver and OOIDA Life Member Bob Esler of Taylor, MI, said the push to bring more money to the state by reinstituting the rolling stock tax would likely have the opposite effect.

“If they pass the rolling stock tax again, guys aren’t going to base plate in Michigan. They will go somewhere else. Then your parts would be affected. Your trailers would be affected. The cost of doing business would go back up,” Esler told Land Line.

Another bill – HB5391 – 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.

One more bill – HB5392 – 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.

Esler said the bill essentially picks on Michigan’s intrastate truckers.

“We have a lot of guys who are rock haulers and aggregate haulers who run strictly intrastate. They would be penalized buying rolling stock in the state of Michigan,” he said.

The bills are in the House Tax Policy Committee. A similar effort was put before lawmakers during the 2007 regular session, but the bills never got out of the committee.

To view other legislative activities of interest for Michigan in 2009, click here.

– By Keith Goble, state legislative editor

Editor’s Note: Please share your thoughts with us about the legislation included in this story. Comments may be sent to statelegislativedesk@ooida.com.