Wednesday, May 1, 2024

Lifting gas tax won't boost tourism, economy

Gas prices don’t seem to be lowering any time soon, but Michigan residents could be seeing a little relief at the pump this summer.

After Sens. Hillary Clinton, D-NY, and John McCain, R-Ariz, suggested a tax break on gas, local Republican lawmakers are pushing for their own version of a gas tax holiday by proposing to temporarily eliminate Michigan’s sales tax on gas for the summer driving season.

The proposal would cut the 6 percent sales tax from Memorial Day to Labor Day which would lower gas prices by up to 20 cents per gallon. The hope is that the tax break will generate additional money by attracting tourists.

This plan sounds terrific on the surface but if drivers examine what the state would be losing, they might not complain so much about the prices at the pump.

The state would take a $300 million loss if the proposal passes even with a $350 million surplus from last year’s general fund picking up the slack, that’s still a lot of money going down the drain.

The money generated from the sales tax is used to repair Michigan roads. With the past winter being one of the worst in recent years, we can’t afford to skimp on road repairs.

Even if the 6 percent sales tax on gasoline is eliminated, the increased tourism may cause more wear and tear to our roads, leading back to the fact that we need the money from the gas tax to cover the costs of road damage.

Like President Bush’s plan of issuing checks to stimulate the economy, if people use the checks to pay off bills or debt, it won’t have much of an effect on the economy. The same could be said for the gas tax proposal — if people don’t have the time or the money to travel, then what good will it do for Michigan’s tourism sector?

Lawmakers should also take into account Michigan’s declining tourism sector.

In 2007, Michigan tourism declined by 1.8 percent and MSU researchers recently predicted the number of travelers will again decrease by 2 percent in 2008. Chances that the gas tax break will spur tourism are slim.

In reality, other than Michigan residents, who will hear about this gas tax cut? Are we going to spend time and money advertising that Michigan has cheaper gas than some states? Travelers might not jump at the chance of visiting Michigan based solely on our gas prices.

Because Michigan is only one of few states that charge a sales tax on gas, tourists might not choose to vacation in Michigan if their state has never had a sales tax on gas.

It would be a better idea if the state cut only half of the 6 percent sales tax, giving drivers a break at the pump while still giving the state money to be used for other purposes.

This gas tax break might have mattered a bit more a few months ago when the price of gas wasn’t as high as it is today. With the numbers at the pump constantly climbing, drivers might not be able to recognize this small difference.

This issue boils down to what drivers want to suffer most – our tourism sector, roads or our pockets.

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