Internet sales tax revenue is on the radar of Michigan’s chief executive to bolster infrastructure work in the state.
The recent announcement from Gov. Rick Snyder follows a U.S. Supreme Court decision that internet companies do not need to have a physical presence in a state for the state to collect sales tax from online purchases.
The court exempted from the requirement companies that either do less than $100,000 in sales to a state’s customers or that do fewer than 200 transactions with a state’s customers during a given year.
Beginning Oct. 1, revenue from much of the online sales must be collected. Payments are due to states starting on Nov. 1.
Snyder wants to route all of an estimated $200 million in annual revenue from the state’s new internet sales tax to roads.
The Michigan Legislature would need to approve any plan to earmark internet sales tax revenue to transportation.
Critics say it is not right to put all the money into transportation while shutting out funds that include education.
Supporters say depositing the money into the roads account would benefit the state’s quality of life and economic progress.
More money already benefiting roads
Already this year legislators and the governor have given approval to a plan to provide funding to fill potholes. Specifically, a supplemental spending bill approved this spring provides an additional $175 million for repair work throughout the state.
“Michigan’s roads are not in good condition, and we have heard the frustration from residents about the need for improvement,” Snyder said in previous remarks.
The funds available via the supplemental spending bill and the first round of vehicle taxes and fees are estimated to contribute $800 million in new state funding.
More funding for roads upcoming
A 2015 law is billed to fix the state’s ailing road and bridge system. The $1.2 billion, multibill package included authorization of an annual transfer from the state’s general fund to roads, and fuel tax and vehicle fee increases. However, the funding does not take full effect until 2021.
Snyder said additional revenue raised via linking vehicle and fuel tax rates to the consumer price index this year will contribute another $630 million for this season’s transportation work.
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