Inadvertent tax break for car insurers targeted for repeal

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By: Associated Press

("Michigan Governor Rick Snyder Talks with Michigan Municipal League Board" by Michigan Municipal League, CC BY-ND 2.0)

LANSING, Mich. (AP) — Gov. Rick Snyder and lawmakers inadvertently gave auto insurers a tax break worth $80 million a year.

Now, they want to end it — either to bail out Detroit’s school district or to address other priorities at a time Flint’s water crisis could cost the state hundreds of millions of dollars.

A 2012 law transferred an insurance program from the secretary of state’s office to an outside group. The move made car insurers eligible for a tax credit that was unanticipated.

Republican Rep. Al Pscholka says reversing the credit would rescue Detroit schools without hurting other budget priorities.

But the insurance industry opposes the plan and says it would result in a “car tax” on drivers.

The other potential funding source for Detroit is Michigan’s annual payment from tobacco companies.