Whitmer backs suspension of 6% sales tax on fuel, but may face obstacle

Beth LeBlanc Craig Mauger
The Detroit News

Lansing — Gov. Gretchen Whitmer on Friday backed a suspension of Michigan's 6% sales tax on fuel, a proposal that may hit a blockade in the state House and Senate where Republican leaders want a heftier gas tax suspension than the sales tax alone. 

Whitmer's announcement came a day after she repeatedly avoided questions regarding her position on a sales tax suspension, and shortly after the GOP-led Legislature gave some of the final approvals to a separate proposal that would suspend the state's 27-cent excise tax on fuel. 

Whitmer has signaled she'd veto the GOP-led Legislature's gas tax proposal, but in a Friday statement supported a separate plan floated by Senate Democratic Leader Jim Ananich, D-Flint, that would roll back the state's 6% sales tax on fuel — a savings of about 24 cents per $4 gallon. It's not clear how long the proposed suspension would remain in place.

Whitmer also has asked Congress to consider lifting the 18-cent federal tax on gasoline. 

Michigan Gov. Gretchen Whitmer attends an event with President Joe Biden on the White House campus, Wednesday, March 9, 2022, in Washington.

"A short-term pause is a fiscally-responsible action we can take that will provide drivers relief at the pump right now — not next year — while also protecting funding for road repairs and saving tens of thousands of good-paying construction jobs," Whitmer said in a statement. "While I am open to negotiating on alternative proposals, I will not support legislation that jeopardizes road repairs, construction jobs, or funding for local schools." 

Senate Majority Leader Mike Shirkey, R-Clarklake, said Whitmer's plan is "weeks late and millions of dollars short" and a "half-measure" compared with the savings drivers could realize with the  suspension of the 27-cent excise tax on gasoline proposed by Republicans. 

“If the governor really wants to help Michiganders, she’ll tell Senate Democrats to support immediately suspending the gas tax. Then we can talk about doing away with the sales tax on gas once and for all," said Shirkey, who has supported in the past a permanent removal of the sales tax on fuel. 

House Speaker Jason Wentworth, through a spokesman, has opposed a sales tax suspension on fuel because it would mean lower savings — should gas prices remain flat or dip — than a suspension of the flat 27-cent fuel tax suspension for residents hit hard by weeks of $4-a-gallon gas prices and growing inflation.

"In a head to head comparison, the governor's suggestion saves families less money at the pump at a time when they need the most relief possible," said Gideon D'Assandro, a spokesman for Wentworth. 

Michigan's gas prices average $4.18 a gallon as of Friday, down from a $4.26-cent per gallon high last week but up from an average $3.37 a gallon a month ago, according to AAA data.

The majority of Michigan's sales tax revenue goes toward schools, but Ananich has argued the sales tax on gasoline has already brought in enough revenue in the first five months of the fiscal year that schools were likely to be held harmless if the sales tax were lifted. If they weren't, the hole could be backfilled with general fund surplus, he said. 

“I look forward to meeting with Republican and Democratic leaders next week to negotiate on our shared priorities," Whitmer said in a statement Friday. "I’ll work with anyone to help Michiganders get more for their money. Let’s get this done.” 

The competing 27-cent fuel tax suspension approved by the Legislature would backfill about $725 million in revenue lost by a six-month pause to the state's 27-cent fuel tax. 

The 27-cent fuel tax suspension is expected to save the average driver about $75 over six months based on driving habits form 2019, according to a Senate Fiscal Agency analysis. 

The House has yet to send the gas tax proposal to Whitmer's desk, but the governor on Friday promised to veto the bill if it arrived on her desk. The bill failed to get enough support in the Senate to gain immediate effect, meaning it wouldn't take effect until 90 days from the end of session, which usually ends in September.