Michigan Senate passes fuel tax pause bills

A suspension of Michigan taxes on motor fuel passed the state Senate Thursday.

Speaking ahead of voting on the legislation, State Sen. Roger Victory (R-Hudsonville) said pausing the gas tax is necessary as prices soar.

“While state government is seeking historic budget surpluses, Michigan family budgets are being stretched thin,” Victory said.

Thursday’s vote comes after new revenue estimates suggested the state would end the year with a surplus.

The proposal is split into four bills that would enact tax suspensions from June 15 through Sept. 15.

Victory’s bill, SB 1029, would temporarily set Michigan’s per-gallon motor fuel tax rate at 0 cents. It would also set aside $300 million total for county road commissions, cities, and villages to account for projected lost revenue.

During discussions on the package, Senate Minority Leader Jim Ananich (D-Flint) voted in favor of the bills. Though, he acknowledged concerns about programs paid for by taxes on gas.

“We pledge to work across the aisle and with the governor to make sure no program is financially harmed,” he said.

Meanwhile, the other three bills in the package would prevent sales and use tax collection on eligible fuels and qualified commercial vehicles.

State Sen. Tom Barrett (R-Charlotte) said charging the state’s 6% sales tax on fuel is having an outsized impact.

“As working-class families, middle-class families and small businesses are paying more in fuel, the government is actually getting richer by that action because the cost goes up and they recoup more as a percentage of that. That, to me, is something that we absolutely have to put a stop to,” Barrett said.

Earlier this year, Gov. Gretchen Whitmer vetoed legislation that would have suspended the state’s motor fuel tax. But she didn’t shut the door on pausing other types of taxes on gas.

The package voted on Thursday received substantially more bipartisan support in the Senate than the previous attempt.

But Sen. Jeff Irwin (D-Ann Arbor) still had his doubts slashing gas taxes would help families struggling through inflation.

“There is nothing in this legislation that prevents oil companies, distributors, and gas stations from continuing to charge higher prices. They, just like has happened in other states, can and will pocket the difference,” Irwin said.

He pointed out residents who don’t drive also likely won’t see any benefit from the policy.