Sales Tax Hike Could Affect Families

By: Shannon Kantner Email
By: Shannon Kantner Email

One option to fund the Governor's request for more money to maintain Michigan's roads is raising the state sales tax from six to eight percent, and it could have some major financial consequences for families in Michigan.

For instance, gymnastics class in Jackson means a lot to Matt Laura's two daughters.

"To see them grow from week-to-week and month-to-month, and the things that they do at home, it's been really good for their confidence," Laura said.

But classes can also cost a lot, making it something parents might have to say 'No' to if Michigan's sales tax is raised 2 percent. It's an idea that has All-Around Gymnastics owner Gale Weck concerned, especially on payment day.

"Things have finally turned around for us," Weck said. "So, hopefully they can save somewhere else and keep their kids involved in a program that's really good for them."

Experts say that might not be possible for many Michigan families if the sales tax increases.

"They're going to have to cut something," Michigan State University Professor of Economics Charles Ballard said. "Does it mean that they skip a car payment? Does it mean that they don't have Christmas this year? I'm not sure what it means, but it's not an easy choice."

He estimates it will cost the average family about $400 a year if the sales tax goes up. While almost everyone agrees the roads need improvement, Ballard said increasing the existing sales tax to raise the money isn't the answer.

"It's a very discriminatory tax," Ballard said. "It hits the low-income folks disproportionately hard."

Instead, he would prefer the sales tax now be broadened to more services and entertainment - like hiring an accountant or concert tickets - but any tax idea is a tough one to sell.

"You go into this understanding that there is no tax that everybody's going to say, 'Oh yea, that's wonderful, let's raise it,'" Ballard said.

Even parents who use the deteriorating roads to get their kids to gymnastics.

"I think the roads need to be fixed, I think that's important, but I don't know that this is necessarily the answer," Laura said. "I've never met anyone who wants to pay more taxes."

The last time Michigan's sales tax went through a major change was in 1994. It was raised from four to the current six percent.

This proposal is part of a package of legislation introduced by Senate Republicans last week. The sales tax increase is coupled with the elimination of the 19 cents a gallon gas tax. There's also a separate proposal to replace the per-gallon gas tax with a tax on the wholesale price of gasoline, and a big increase in vehicle registration fees.

The proposal would still have to make it through committee meetings and floor debate, but it could be on the May ballot for voters to decide.

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  • by Anonymous on Feb 10, 2013 at 03:28 AM
    I do like this law. It does hit the rich even more. It also hits the people who do not pay income taxes or are the beggars of society.
  • by Anonymous Location: Lansing on Feb 7, 2013 at 07:43 AM
    I don't like the increase as much as the next guy, but think about not living over and above your means.
  • by Joann Location: Hillsdale on Feb 5, 2013 at 03:09 PM
    instead of the Government making the hard working pay for everything why dont their employees take a pay cut and use that money to donate. They taxed gas to fix the roads why isnt the roads fixed so apparently they dont know how to manage the money they have let alone give them more. And why should government workers make a 6 digit salary because if it wasnt for us little people they wouldnt even have jobs.
  • by Anonymous on Feb 5, 2013 at 07:19 AM
    .... However, a raise in the registration fee on a car (or 2 for most families) and another gas tax could be more expensive than the 8% sales tax and elimination of the present gas tax.
  • by Rob Location: Fowlerville on Feb 5, 2013 at 06:14 AM
    @ Anonymous Feb 3, 5:37 am - I think what you meant to say was that $400 BUYS less than it did when Granholm first floated the sales tax rise idea. That doesn't mean it's easier for families to part with $400 because their pay hasn't increased since then. Increasing the sales tax was a bad idea then and it's a bad idea now, especially considering that the money the state gets from the gas tax isn't being spent on the roads, which is what the tax was supposed to be for to start with. What's the new tax going to be spent on this time? A new bridge we don't need? Pay raises for congress? They should be spending the money they're already getting on the purpose it was intended for. Then there would be no funding problem whatsoever.
  • by Anonymous on Feb 5, 2013 at 05:05 AM
    So a 33% hike in sales tax is good? WOW Yes roads need to be fixed. But a tax increase of 33% that's a lot of money for some.
  • by C Hill Location: St Johns on Feb 5, 2013 at 04:55 AM
    Does Michigan still use the allotment system that has been in place since the 1950s to distribute road maintance funds?
  • by JRH Location: Owosso on Feb 5, 2013 at 04:07 AM
    5 mentions of "raise" or some form of it and 4 mentions of "increase", but only 1 of "cut" and that was aimed at the taxpayer.... We cannot afford to send the kiddies to gym class but we have to pay for t-bones and lobster for the takers of society............ hmmmmmmmm
  • by Anonymous on Feb 5, 2013 at 02:37 AM
    When Granholm introduced an idea to raise the income tax a few years ago, it was a great idea. This hits all taxpayers, not just those who pay income tax. $400 is less for a family of four than it was during the granholm administration.
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