LANSING – The administration of Governor Rick Snyder will seek legislation to correct a potential problem in the road funding plan that as written would lift the sales tax off of gasoline only for motor vehicles, but not for boats, snowmobiles and other non-road purposes like generators and gasoline-powered equipment.

As currently constructed, that would create a mess for retailers who theoretically would have to determine whether or not to charge the sales tax and even ask customers filling up a gasoline can what the intended use of the purchase is. The Citizens Research Council of Michigan, as part of a broad analysis it is conducting on the road funding plan, noted the quirk and provided the information to Gongwer News Service.

If voters approve Proposal 15-1 to raise the sales tax from 6 to 7 percent, then several other laws will take effect, including the measure to remove the sales tax from fuel for motor vehicles.

However, the administration and key stakeholders have been aware of the problem and will fix it, a spokesperson said.

“It was known, during late December, that follow-up legislation would be needed after the first of the year, to expand the exemptions in the proposal,” said Terry Stanton, spokesperson for the Department of Treasury.

Formally lifting the sales tax off of fuel sold for non-road purposes will not affect the estimated loss of revenue because those estimates were based on total gasoline sales, not segregated for road and non-road uses.

Representatives of the state’s gasoline stations said they fully expected a trailer bill to correct the problem.

“From a practical standpoint, nobody at a gas station has the time or desire to run out and ask somebody filling up a gas can whether or not that gas is going to end up in a motor vehicle or not,” said Mark Griffin, president of the Michigan Petroleum Association/Michigan Association of Convenience Stores. “I’m sure it will get worked out.”

Griffin said he is not worried about the situation. He noted that new major laws often need trailer bills to correct any gaps. He said he has received some calls from people trying to use the issue to gin up opposition to the ballot proposal.

But trying to administer such a system would be extremely difficult not only for the retailers, but also the Department of Treasury, Griffin said.

“I don’t think Treasury has any desire to be leaning over our shoulder,” he said.

Ed Weglarz, director of petroleum for the Associated Food and Petroleum Dealers, said it is no surprise some fixes will be needed to the road funding laws.

“This legislation was put together on the back of a gum wrapper at 5 in the morning, and I don’t think they thought everything through,” he said.

Clearly though, having separate sales tax laws for fuel purchased for road and non-road uses will not work, Weglarz said. The problems that would occur in lines at the register as staff tried to determine how much sales tax to charge would be immediate.

“That’s putting too much burden on a cashier,” he said. “They’re going to have to come up with some companion legislation that will address that issue.”

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