Sales Tax

The state of Michigan currently levies a 6 percent tax on "tangible personal property" sold in the state. More accurately, the state levies this tax on certain buyers purchasing certain goods from certain sellers in certain transactions.[82] The 6 percent is comprised of two parts: a maximum of 4 percent set by the state Legislature and an additional tax of 2 percent authorized on May 1, 1994, by Article 9, Section 8, of the Michigan Constitution.

Article 9, Section 11, of the state constitution specifies that all revenue raised by the additional 2 percent must be credited to the state school aid fund and that 60 percent of the revenue raised from the 4 percent sales tax must also be appropriated to the school aid fund. This means that approximately 73.3 percent of the total sales tax revenue is credited to the school aid fund.[83] In fiscal 2006, approximately $4,883,700,000 was added to the school aid fund from sales tax revenue.[84]

Use Tax

The use tax is a levy for "the privilege of using, storing, or consuming tangible personal property" in the state of Michigan. The tangible personal property specifically mentioned in state statutes includes vehicles, manufactured housing, aircraft, snowmobiles and watercraft, and use taxes are collected when the ownership of such property is transferred.[85] The use tax rate is 6 percent of the price of such items, with several exemptions.[86] As with the sales tax, the 6 percent is made up of a constitutionally allowed 4 percent and an additional 2 percent authorized by voters at the same time they authorized the additional 2 percent addition to the 4 percent sales tax.[87]

All of the revenue from the two percent use tax increase is credited to the state school aid fund,[88] while the four percent portion is allocated to the state’s general fund.[89] In other words, one-third, 33.3 percent, of the revenues raised by the use tax is appropriated for education.[90] In fiscal 2006, approximately $470,500,000 in use taxes was credited to the state school aid fund.[91]

Cigarette Tax

The state of Michigan levies an excise tax on cigarettes, in addition to the sales tax levied on this tobacco product.[92] The cigarette excise tax rate is 100 mills per cigarette,[93] or $2.00 on a pack of 20 cigarettes (20 cigarettes × $0.10). Of this amount, 41.62 percent is credited to the state school aid fund.[94] Thus, approximately 83.24 cents per pack of cigarettes is credited to the school aid fund. In fiscal 2006, $472,199,127 was transferred to the state school aid fund from cigarette taxes.[95]

Liquor Tax

In addition to other taxes on the sale of liquor,[96] a 4 percent excise tax is levied on liquor sales.[97] The revenue from this excise tax is credited to the state school aid fund. In fiscal 2006, $34,496,655 was credited to that fund.[98]