By Alethia Kasben
Managing Editor
Posted: July 11, 2024 3:58 PM

The distributors administering the 10-cent deposit for cans and bottles would be eligible for a tax credit that is estimated to total $20 million across all distributors under a bill discussed in a House panel on Tuesday.

HB 5546 would create an individual and corporate tax credit for distributors that originate deposits on beverage containers. A similar tax credit has existed in the past with its most recent demise coming in 2011 through the wholesale tax changes made under then Governor Rick Snyder.

The refundable tax credit under the bill would equal a half-cent per returnable container sold during the tax year. The amount would be automatically adjusted for inflation. The estimated cost, according to the House Fiscal Agency, is $20 million annually, which would come from the General Fund.

Rep. Will Snyder (D-Muskegon), the bill sponsor, said the task distributors undergo to make the bottle deposit system work is complex and expensive.

"The amount of containers a year sold is somewhere around 4 billion containers a year. When the bottle bill was originally enacted, distributors received the dimes for containers that were not returned, known as unclaimed deposits," he said. "This funding allowed distributors to invest in infrastructure and helped offset operating costs. Over time, this money has been diverted to other areas."

Snyder said the bill, which has 50 co-sponsors, would allow reinvestment to maintain infrastructure and ensure the system operates efficiently.

Brett Visner, with the Michigan Beer and Wine Wholesalers Association, also supported the bills.

Visner said the total cost of the deposit system for distributors is about $60 million, so the $20 million tax credit doesn't offset all of the costs.

"Distributors do an excellent job and we're really proud of our members for how they run the system," Visner said. "It is efficient, effective. But it's expensive. It's expensive and investment is needed. And that's what this legislation is all about. It's about sustained investment in the bottle bill operations to make sure that it continues to function."

The Department of Treasury opposes the bill.