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Transportation:
Gas Tax Cap

Our Position: oppose
Bill Number: HB-4204
Sponsor: Robert Gosselin - (R) District 41, Troy

According to this bill, if the price of gas in Michigan rises above $2.30/gallon, no state sales tax would be charged on the price above that threshold.  Since premium gas is more expensive than regular gas, owners of expensive vehicles that get poor gas mileage would be the main beneficiaries.  Most taxpayers, however, will see little benefit. According to the legislative analysis of HB 4204, someone who drives approximately 15,000 miles per year and gets 20 mpg, would see a savings of only about $30 for the year.

The School Aid Fund would be the biggest loser from HB 4204. Revenue sharing (from the state to local units of government) would also be affected, potentially leading to higher property taxes to make up budget shortfalls.

Status

5/16/05 - On the House Calendar for this week - substitute bill H-3.

3/23/05 - Passed out of House Tax Policy Committee with recommendations for passage, with substitutes included in version H-3. The bill is on second reading in the House. If the bill is brought up for third reading, it could go to a full vote of the House.

2/3/05 - Referred to House Tax Policy Committee.

Action Needed

Send an email to your House Rep. asking him or her to OPPOSE this bill.

Link to your House Rep:
http://house.michigan.gov/replist.asp

More information

Legislative Analysis:

http://www.legislature.mi.gov/documents/2005-2006/billanalysis/house/pdf/2005-HLA-4204-3.pdf

Contact

Background

Gas prices today are higher than ever before, and are not expected to decline any time soon. Prices of over $2 per gallon for regular gas are now standard across Michigan.

Despite years of warning over possible increases in gas prices, consumers have purchased larger and larger vehicles with poor gas mileage. SUVs now make up about 12% of the country’s registered vehicles, and about ¼ of all vehicles purchased over the last few years have been SUVs. In addition, the federal government’s tax incentives encourage consumers to buy the largest and least fuel-efficient vehicles, such as the Hummer.

High gas prices have created a panic.  HB 4204 was introduced in February to give a tax break to customers driving vehicles that use the most and highest priced gas.  According to this bill, if the price of gas in Michigan rises above $2.30/gallon, no state sales tax would be charged on the price above that threshold.  Since premium gas is more expensive than regular gas, owners of expensive vehicles that get poor gas mileage would be the main beneficiaries.  Most taxpayers, however, will see little benefit. According to the legislative analysis of HB 4204, someone who drives approximately 15,000 miles per year and gets 20 mpg, would see a savings of only about $30 for the year.

The School Aid Fund would be the biggest loser from HB 4204. Revenue sharing (from the state to local units of government) would also be affected, potentially leading to higher property taxes to make up budget shortfalls.

Sierra Club Perspective

Given the problems of global climate change and air pollution, the State of Michigan should not be subsidizing the operation of the least fuel efficient and most polluting vehicles. Rather than giving tax breaks to owners of gas guzzlers, the Michigan legislature should be taking positive steps toward reducing Michigan’s dependence on foreign oil. Encouraging automakers to build more fuel-efficient vehicles, supporting higher fuel efficiency standards at the national level, raising energy efficiency standards at the state level, and fully funding public transit would all be steps in the right direction.