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Michigan legislature hits bump in the road to suspending state gas tax

By and Jack Nissen
Published  March 16, 2022 8:15am EDT
Gas Prices
FOX 2 Detroit

'Just getting by and scraping by'; drivers pinching every penny amid high gas prices

A short-term solution of repealing the state gas tax fell on deaf ears in the governor's office after the Michigan legislature passed a repeal that would save drivers 27 cents a gallon over the next 6 months.

BERKLEY, Mich. (FOX 2) - As Michigan drivers continue to wade through high gas prices, a Republican-sponsored bill that would suspend the state's gas tax for the next six months reached a hiccup during voting proceedings.

Gov. Gretchen Whitmer has already signaled she would veto the bill, which would save drivers 27 cents a gallon. However, because two-thirds of the state Senate did not approve the bill - following a 24-14 vote on Tuesday - the gas tax suspension would not take effect until 2023. 

The Republican-led legislature first passed the bill in the state House last week along mostly party line votes. The state gas tax suspension plan was announced shortly after the Democratic leader and several other governors called for a suspension of the federal gas and diesel tax.

Michigan drivers are paying around $4.23 a gallon, amounting to about $60 to fill up a 15-gallon tank of gas. 

The short-term fix was rejected in exchange for a more bipartisan fix. State Democrats instead proposed a measure where the state could temporarily pause the 6% sales tax on fuel and keep intact funding for schools and municipalities that benefit. 

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"We all know there are potholes everywhere that need to be filled and massive road and bridge projects in our districts and around the state that need to be completed," said Sen. Stephanie Chang of Detroit.

Lawmakers also worried that the savings drivers would make on the suspended tax wouldn't be noticed. 

According to the nonpartisan Senate Fiscal Agency, Michigan drivers on average buy 557 gallons a year. They pay $151 in per-gallon taxes and, at current prices, $125 in sales taxes. They would save roughly $75 under the bill heading to the governor.

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The price for a barrel of oil has declined in recent days. However, the cost for gasoline has remained at near-record levels.

According to AAA, the price of crude oil was around $100. If the trend holds, it may remove some extreme pressure pushing up gas prices. 

"It bears reminding that the cost of oil accounts for about 50% of what drivers pay at the pump," said Andrew Gross, AAA spokesperson said earlier this week. "This war is roiling an already tight global oil market and making it hard to determine if we are near a peak for pump prices, or if they keep grinding higher. It all depends on the direction of oil prices."