LANSING, Mich. (AP/WOOD) — Gov. Rick Snyder has signed legislation rescinding an annual tax break worth up to $80 million that was inadvertently given to auto insurers four years ago.
“This is essentially an accidental tax credit the legislature did not intend to give this tax credit the auto industry, insurance industry didn’t ask for it,” said Rep. David LaGrand, D-Grand Rapids.
Snyder’s signature Friday had been expected as part of a state budget deal.
“If we continue to give an $80 million tax break from the taxpayers to specific industry like the auto industry for no justifiable reason, well at the end of the day that comes out of the tax payers pockets. So if I’m going to be a good steward of my constituents’ money, I really don’t have a good argument for continuing that tax break,” said LaGrand.
Industry leaders have conceded that the tax credit was awarded by mistake, but warn that premiums will go up. Some lawmakers question that warning, saying drivers never got a break when the industry qualified for the tax credit in the first place.
“They have been operating competitively before they got this tax credit. I didn’t see any massive reduction in anybody’s auto insurance when they got the tax credit so of course its less money in their pocket,” LaGrand said.
The unintended credit began after legislators transferred management of Michigan’s assigned claims plan in 2012.
“Its a lot of money. We are talking about enough money to fund the restructuring of the Detroit Public Schools without costing the tax payers money without costing the school aid money. It’s an obvious good fiscal move,” said LaGrand.
The Republican governor called for eliminating the tax break as part of his budget proposal earlier this year.