Indiana’s neighbor to the north is well on its way to suspending its gasoline tax.
The state’s Republican-led Legislature on Wednesday began voting to lift, for six months, Michigan’s 27.2-cents-a-gallon gasoline and diesel taxes amid pump prices that exceed $4 per gallon.
While Michigan lawmakers appear agreeable to a gas-tax break, Indiana lawmakers passed on the chance to consider similar legislation. Indiana Senate and House Democrats proposed a three-month moratorium on the 7% sales tax on fuel and the 32-cents-per-gallon gas excise tax, but Republicans rejected the idea.
Michigan GOP leaders announced their plan a day after Democratic Gov. Gretchen Whitmer urged Congress to suspend the 18.4-cents-a-gallon federal gas tax and 24.4-cent diesel tax. Her office did not embrace temporarily halting state fuel taxes, saying it would hamper road repairs.
The House legislation, which was approved 63-39 with Republicans and some Democrats in support, will go to the governor once the Senate votes next week.
The statewide average price for unleaded gas was nearly $4.25 per gallon, up 62 cents in a week and 88 cents in a month, according to AAA Michigan.
“This is a serious situation that requires more than letter writing and the magnanimous gesture of asking someone else to foot the bill,” Senate Majority Leader Mike Shirkey, a Clarklake Republican, said in a statement that said many Michiganders are living paycheck to paycheck.
“Michigan has billions of dollars in surplus revenue available and one of the nation’s highest state fuel taxes. The solution here isn’t complicated,” said Republican House Speaker Jason Wentworth of Farwell.
The bill to pause the taxes from April through September would save drivers approximately $725 million.
The federal legislation would transfer general funds so transportation funding to states is not cut.
“Right now, the best way to bring down the price of gas without impacting our ability to fix the damn roads is by suspending the federal gas tax,” Whitmer spokesperson Bobby Leddy said.
He called on legislators to pass her proposals to eliminate taxes on retirement income and boost a credit for lower-income workers. She is expected to veto a GOP measure that would cut the state income tax, expand exemptions to younger seniors and mostly restore a child tax credit.
Wentworth spokesperson Gideon D’Assandro said lawmakers would move to offset the loss of state fuel tax revenue that pays for road and bridge maintenance if the governor agrees to the freeze. Rep. Samantha Steckloff, a Farmington Hills Democrat, said she would oppose the legislation until a provision is added to backfill the funds.
“Without it being in the bill, this is a rumor,” she said.
House Minority Leader Donna Laskinski, a Democrat from Washtenaw County’s Scio Township, accused Republicans of pushing “another irresponsible and reckless tax cut” that would “leave potholes bursting Michiganders’ tires and bending rims.”
The top Democrat in the Senate, meanwhile, advocated for halting the state’s 6% sales tax on fuel for a year instead of suspending the per-gallon tax. Senate Minority Leader Jim Ananich of Flint said it is “a smarter way to go” because drivers could save more if prices stay high and go higher and because Michigan is generating more than expected from the fuel sales tax, .
The per-gallon gas tax funds roads, while the sales tax on gas primarily goes to schools and municipalities.
“Mine would not affect our ability to fix, maintain and repair roads. It’s based on having money that we weren’t expecting,” Ananich said, saying he would ensure that school aid fund revenue does not drop below what was expected before gas prices spiked.