Small Business Not On Board with Gas Tax Hike in Lame Duck Session (UPDATED 12-10-2014!)

Date: December 10, 2014

Small Business Not On Board with Gas Tax Hike in Lame Duck Session

Small Business Not On Board with Gas Tax Hike in Lame Duck Session

Lame Duck Road Funding Update (December 10, 2014): House and
Senate leaders have announced that all bills related to road funding will be
kicked to a joint House-Senate Conference Committee this week. This would
include both the Senate Plan (more than double the gas tax) and the NFIB
supported House Plan (Increase road funding without a gas tax hike). A bill that could create a sales tax on services (HB 6082) to fund roads has also ended up on the table for the conference committee discussions.

Lawmakers appointed to the conference committee include
Senate Majority Leader Randy Richardville (R-Monroe area), Senator Arlan Meekhof
(R- West Michigan area), Senator Gretchen Whitmer (D-East Lansing), House
Speaker Jase Bolger (R-Marshall), and Representative Tim Greimel (D-Auburn

Under House and Senate rules, legislation reported from a joint
House-Senate Conference Committee can only be voted on a straight up YES or NO
vote in each chamber as reported from the committee – with no amendments or
changes allowed on the floor of either chamber. For this reason, any plan
reported from the committee will likely be the final proposal put to a vote of
both chambers.

NFIB will continue to be engaged in supporting the House
plan (see below for more information on the House plan).

NFIB has expressed vehement opposition to the S-13 version of HB 5477 that passed
the Senate on November 13th. This legislation seeks to raise the
wholesale fuel tax to 15.5 percent by 2018. 
It is estimated
that a 15.5 percent tax on the wholesale price could raise the current 19 cents
per gallon gasoline tax to about 45 cents per gallon, depending on the wholesale price of gas. The legislation is now in the Michigan House awaiting further action.

However, NFIB has announced support for a new road funding proposal has been put forth by House Speaker Jase
Bolger that seeks to increase funding for roads while avoiding an increase in
the tax at the pump. Michigan currently charges a sales tax on top of the gas
tax with none of the funding going to roads (it goes to local governments and
schools). Bolger’s plan would gradually repeal the current 6 percent sales tax
on gasoline and replace it with a percentage tax on the wholesale price of fuel over six years. This would mean that the current sales tax
revenue would gradually be shifted to funding roads and not local governments
and schools. The plan would raise an estimated $1 billion more annually for
roads, while the pump tax would remain the same based on current wholesale
price levels and all of the money paid at the pump would go toward road
funding. According to the plan’s supporters, projected economic growth will
boost overall sales tax revenue, making up for money schools and cities would
lose by eliminating the sales tax on gas and diesel. State economists in May
projected sales tax receipts would increase $230 million annually in the 2017
fiscal year and subsequent years. The Bolger plan would result in a billion
dollars more for roads, replace any revenue lost to schools and local government, all without raising
gas and diesel taxes.

A recent survey of NFIB small business members on the Bolger plan showed that 70
percent supported the plan, 19 percent opposed the plan and 11 percent were
undecided. Prior member surveys on increasing the gas tax to fund roads received
little support.

While we
recognize the need for good roads and adequate funding, this is a difficult
time for fuel tax increases on Michigan small business job providers. While
current gas prices have moderated from the high levels of four dollars or more a
gallon, this legislation will place Michigan among the highest gas tax states
in the country and any future increases in gasoline prices will only exacerbate
this situation.

Raising the
pump price of fuel with this tax proposal and the recent increase in the
minimum wage will both put pressure on the bottom line of Michigan’s small and
family owned businesses. Add to this the latest round of Obamacare health
insurance hikes on small business and it is easy to see how this approach to
road funding could jeopardize Michigan’s economic recovery.

In the past, small business has also shown support for fuel tax increases
when reforms, such as repealing Michigan’s wasteful Prevailing Wage Law, are
part of the proposal. Unfortunately, no such reforms are included in the Senate legislation that would increase the wholesale fuel tax to 15.5 percent by 2018.

NFIB will be working to support the new plan put forth by Speaker Bolger in the remaining days of the 2014 lame duck session.

Small Business Not On Board with Gas Tax Hike in Lame Duck Session

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