Gov. Rick Snyder vetoed on Tuesday a tax cut recently approved by the Michigan Legislature, saying the measure would put too much strain on the state's budget.
Snyder vetoed legislation that would have accelerated a tax cut approved in 2013 for those trading in a vehicle when purchasing a new or used vehicle.
It's the latest example of Snyder, a Republican, being at odds with a more conservative Republican Legislature.
"The bills would accelerate a gradual and agreed upon phase in of the sales and use tax relief to a degree that I believe is not fiscally prudent," Snyder said in a news release.
"With budget pressures from a number of areas in coming years, in particular dedication of funds to road funding, I do not believe it is appropriate to create additional financial strain by accelerating the tax relief agreed to in 2013."
The 2013 legislation, known as the "sales tax on the difference" legislation, reduces the sales tax paid by buyers who use a trade-in toward the purchase. Once fully phased in, buyers would only pay 6% sales tax on the difference between the price of the vehicle they were buying and the value given to their trade-in.
Until then, Michigan was one of only a handful of states where buyers using a trade-in still paid sales tax on the entire value of the new vehicle.
Under the 2013 law, buyers initially could exempt a trade-in value of up to $2,000 from the sales tax. The value is to increase by $500 annually over 25 years and is currently at $3,500.
Senate Bills 94 and 95, which Snyder vetoed, would have greatly accelerated that phase-in.
The Senate Fiscal Agency estimated they would reduce sales tax revenue by an additional $21.2 million by 2021.
Snyder's move upset more than Republicans in the Legislature.
"Here's something that puts money in the pockets of Michiganders and supports the car industry, but this governor can't find a way to get it done," said Senate Minority Leader Jim Ananich, D-Flint.
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