A photo from the Feb. 4, 2025, formal session of the Detroit City Council. Credit: City of Detroit Flickr

The City Council unanimously agreed Tuesday to commission a study on creating local sales taxes in Detroit.

The Michigan Constitution prevents municipalities from creating their own sales taxes, which are used by cities in other states to generate revenue from hotels, sporting events, concerts and other tourist activities.

Council President Mary Sheffield and Council Member Latisha Johnson led authorization of an agreement with the Citizens Research Council of Michigan to study legal changes, potential tax rates, the financial impact on city revenue and the tax burden on residents.

Sheffield, who is running for mayor, is a vocal supporter of creating a downtown entertainment tax to offset a property tax cut for residents. Council Member Coleman Young II has been a longtime supporter of the idea, dating back to his time as a state lawmaker.

Detroit has one of the highest effective property rates of any city in the United States, though property taxes make up a smaller share of city revenue compared to taxes on income and gambling.

A resolution passed on Tuesday argues Detroit pays the cost of providing nonresidents with safety, infrastructure other services during large events without the ability to directly recover the costs from visitors. A local sales tax could help generate substantial revenue from concert venues and Detroit’s four professional sports teams.

David Whitaker, director of the council’s Legislative Policy Division, said the study will cover the legal and the practical effects of trying to get the Michigan Legislature on board. He expects to quantify the revenue that could be generated and suggest possible tax rates.

Whitaker said it’s highly unlikely that Detroit would propose a sales tax anywhere near Michigan’s 6% statewide sales tax.

“Six percent would be a lot to ask, it would be a hard sell in Lansing,” Whitaker said.

Council Member Fred Durhal III said he’s open to the idea, but doesn’t want to “shock Detroiters with another tax.” He said it could create a “musical chairs” situation where a property tax cut is offset by higher taxes for residents who go downtown.

“As we continue to grow, there will be opportunities to raise taxes, but our problem right now is that our tax base has not grown significantly,” said Durhal, who is also making a bid for mayor. “If you put another tax right now on residents who always already say they feel burdened by high taxes already, that’s not necessarily solving the issue.

“You may generate a bit of revenue, we’ll come to see how much. We need to be focused on finding ways to lower taxes without imposing another tax.”

Malachi Barrett is a mission-oriented reporter working to liberate information for Detroiters. Barrett previously worked for MLive covering local news and statewide politics in Muskegon, Kalamazoo,...

One reply on “Should Detroit impose new taxes?”

  1. A general sales tax? An entertainment tax (however that works) makes sense, since it covers, as the article says, the city’s need to provide services to out-of-town visitors who come for entertainment in the city. A general sales tax, though, would only hurt local businesses, no? Detroiters already do a lot of shopping outside the city at businesses that won’t locate within city limits.

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