Republicans, road builders and unions favor Michigan tax hike

politics | Dec 27, 2014 | By Martin Barillas

If Michigan voters approve a proposed sales tax increase that will be on the ballot next year, it would give Michigan the second-highest state sales tax in the country, trailing only California.
 
According to the Tax Foundation, California has the highest state-level tax in the United States. It currently is pegged at 7.5 percent. As of now, five other states (Indiana, Mississippi, New Jersey, Rhode Island, and Tennessee) have the second-highest state sales tax at 7 percent.
 
Michigan may soon fall into the category of having the second-highest sales tax in the country if voters approve a proposed sales tax increase. Currently, its sales tax is 6 percent. According to Michigan law, food intended for human consumption is exempt from sales tax, except for "prepared food intended for immediate consumption." Food purchased with food stamps is also exempt, as is food purchased from schools and churches.
 
This year, in the Republican-controlled state legislature, negotiators in the state House and Senate concluded that the state’s voters will decide in a poll on May 5, 2015, whether to increase the current sales tax by 1 percentage point. According to Michigan Confidential, this would increase the state government’s revenue by $1.34 billion per annum. The lion’s share would go to the School Aid Fund, which provides funding to K-12 and higher education. The tax increase would allow the $530 million currently earmarked for education to instead go to pay for the state’s roads and highways, which are plagued with potholes and needed repairs. In all, the tax hike would garner $1.2 billion in annual revenue for roads.
 
If voters refuse to permit the tax increase that has been advocated by Gov. Rick Snyder (R), the legislature will have to revisit the issue.
 
According to a statement on Gov Snyder's website, the agreement reached with the legislature on December 18 would repeal the current 18.7 cents per gallon gasoline tax and replace it with "a new motor fuels tax that is dedicated to funding transportation." The stated intention of the hike is for "schools and local governments have the funding they need," and "Provide tax relief to lower-income Michiganders." According to the governor's website, the tax hike would provide:
 
$1.2 billion for roads and bridges
$112 million for transit and rail
$300 million for schools ($200 per pupil)
$94 million for local governments
$260 million in tax relief for lower-income Michiganders
 
 
Besides Michigan’s governor, the Michigan Infrastructure and Transportation Association is a strong advocate of the tax hike. MITA executive vice-president Mike Nystrom said in a press release in October that the condition of the Mitten State’s roads continues to be an issue with voters. “Michigan loses $3 million every day that the Legislature delays taking action on road funding, or $1 billion annually in transportation asset value.  The Legislature needs to take bold action to fix this crisis.” Nystrom added that Michigan needs an additional $2 billion per annum to maintain roads and bridges. He claimed that for every year that funding is delayed, the funding required grows by more than $100 million.
 
MITA is a trade association that brings together 600 companies in Michigan representing the gamut of construction, ranging from sewer and water, railroads, excavation, bridges and roads, as well as specialty construction. Labor unions are also advocating the tax hike, in concert with certain business interests.
 
Opponents include the Grand Rapids Taxpayer Association, Michigan Taxpayers Alliance, Protect MI Taxpayers, and Ottawa County Patriots. 

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Spero News writer Martin Barillas is a former US diplomat, who also worked as a democracy advocate and election observer in Latin America. His first novel 'Shaken Earth', is available at Amazon.

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