State House Passes Retroactive Car Insurance Tax Hike; State Senate Should Reject This Clunker

June 6, 2016

In a stunning move last week, the State House passed legislation to repeal an important tax credit that will result in a $40 per car tax hike on law abiding motorists in Michigan.

The Michigan Chamber is strongly opposed to this costly initiative -- especially since the Michigan House has failed to pass any reforms to address the skyrocketing cost of Michigan auto insurance. The Michigan Senate has stepped up in an effort to pass reforms to Michigan’s “no-fault” system, but the House has so far failed to follow suit. 

Michigan drivers already pay some of the highest auto insurance premiums in the nation as a result of Michigan’s unlimited benefits. And a lack of enforcement to have insurance makes a bad system worse. More and more people are driving without insurance and the costs of providing benefits to those hurt by illegal drivers is exacerbating the problem. 

The State “assigned claims” program provides benefits to uninsured individuals involved in an auto accident, even though they’ve paid nothing into the auto insurance system. The insurance tax credit taken by Michigan insurers helps to defray and socialize these costs that would otherwise be borne only by Michigan’s law-abiding motorists.

The Michigan Chamber is extremely disappointed with the action taken by the State House last week. At a minimum, we believe the Legislature should couple any repeal with meaningful reforms to the assigned claims program and require actual documentation and proof that an accident and injury occurred.

We urge Chamber members to call their State Senator and ask him or her to stand up for Michigan drivers, reject this clunker, and instead pass reforms that will help lower the cost of auto insurance. 

For questions on this issue or other tax-related issues, please contact Tricia Kinley at tkinley@michamber.com or (517) 371-7669.