Michigan House Bill HB6197

Michigan 2023-2024 Regular Session

• Introduced: 11/26/24
• Refer: 11/26/24

Caption

Use tax: exemptions; storage, use, or consumption of eligible fuel; exempt. Amends sec. 21 of 1937 PA 94 (MCL 205.111) & adds sec. 4gg. TIE BAR WITH: HB 6194'24, HB 6195'24, HB 6196'24

Impact

This bill will notably affect the state's revenue structure. While the exemption is designed to support economic growth, it will also lead to the loss of tax revenue that would have otherwise contributed to the state treasury and education funds. Consequently, the bill outlines provisions to manage the revenue loss by requiring compensatory measures to ensure that affected funds, especially the state school aid fund, are maintained in balance. The anticipated benefits include increased activity in sectors utilizing such fuels, but it raises concerns among lawmakers about fiscal sustainability.

Summary

House Bill 6197 aims to amend the 1937 PA 94, known as the Use Tax Act, to provide an exemption from the storage, use, or consumption taxes applied to 'eligible fuel' starting October 1, 2025. Eligible fuels are defined as any fuel that is subject to taxation under the motor fuel tax act. With this exemption, the bill intends to reduce the financial burden on users of eligible fuels, particularly businesses that rely on them, thereby potentially promoting economic activity within relevant sectors.

Contention

Debate around HB 6197 appears to center on the trade-off between encouraging fuel usage to stimulate economic growth and ensuring that the state's revenue base does not suffer from excessive tax exemptions. Some lawmakers and stakeholders are concerned that the bill may widen the fiscal gap by significantly reducing revenue from this source, potentially impacting public funding in education and local services. Additionally, discussions highlight the importance of maintaining adequate funding for local governments and the implications of this bill on community stabilization initiatives, reflecting a broader tension regarding state versus local fiscal priorities.