DETROIT – As Detroit city leaders weigh new ways to boost revenue, the Citizens Research Council of Michigan is publicly releasing estimates on what a local sales tax could bring in.
Their findings also include warnings about the legal and practical challenges of making it happen.
The privately funded, independent, nonpartisan public policy research group said it was asked by the Detroit City Council to examine possible revenue-raising options for the city.
“We were asked by the Detroit City Council, through the city’s legislative policy division, to look at revenue-raising opportunities for the city,” said Eric Lupher, President of the Citizens Research Council of Michigan.
In its analysis, the group estimated that a 1% Detroit-only sales tax could generate about $72 million annually for the city.
“We made an estimate, a calculated estimate, that the annual revenue for the City of Detroit, if they had a 1% sales tax locally, would raise about $72 million,” said Madhu Anderson, Senior Research Associate.
Researchers emphasized that even at that level, the revenue would represent only a small share of the city’s finances — roughly 5% of Detroit’s 2026 general fund budget, according to the group.
Beyond the dollar figure, researchers said a local sales tax could be difficult to implement in a way that reliably captures spending that might otherwise occur in the city.
They pointed to consumer habits, including the growing shift to online purchasing and the reality that residents often leave Detroit to buy certain high-cost items.
“Things like buying a refrigerator, buying a stove, major appliances, things that cost a lot of money, a lot of times, city residents have to travel outside the city to do that,” Lupher said.
A major obstacle is legal: researchers said Michigan’s constitution makes it difficult for local governments to levy a sales tax, meaning Detroit could face multiple steps before it could even place such a proposal before voters.
Anderson said the process would likely require constitutional authority for a local sales tax, action by the state legislature to authorize local governments to levy the tax, and potentially additional legislation to set uniform rules for how municipalities would administer it.
“The constitution has to allow a local sales tax, then the state legislature has to authorize a local government to levy a tax,” Anderson said. “And they may also have to provide a uniform act, so that every city is the same.”
After that, the measure would still need to be adopted locally and ultimately approved by voters.
The Citizens Research Council of Michigan has been reviewing two revenue-raising opportunities for Detroit. While the group analyzed the potential for a sales tax, Lupher suggested the effort required may outweigh the benefit.
“Probably the squeeze isn’t worth the juice with the sales tax,” Lupher said, “but the admissions tax might be more fruitful for the city with less effort.”
The Citizens Research Council of Michigan will present its findings to the Detroit City Council and the Mayor.