Be careful about ascribing today's motives to issues that are decades old. The question should be about how the proposal was framed during the debate. Was it part of a swap to other taxes that would then rise? Was seen as a give away to Detroit? Would ag programs be impacted by the change?
It appears that most of the constitutional referendum from that era were related to taxation: limits on property taxes, impose a graduated income tax, etc. I'd like to see the vote on November 1972 Proposition D, if the OP has a data source.
Under the Michigan Constitution at the time (and perhaps still), local governments were guaranteed a per capita share of sale tax revenues. This may avoid the situation where cities compete for sources of sales tax revenue, either through annexation or recruiting retailers.
It might have also represented a transfer from Detroit to western Michigan. People in that area would have access to apples and cherries, which they could can, and might also have home vegetable gardens, and have venison for meat. People in Detroit would probably buy highly processed food, which has a high cost per food value. The cost of potato chips is much more than an equivalent cost of potatoes.
The measure would have increased the percentage of sales tax revenues transferred to local governments to make up for the decreased the sales tax revenue.
It would have also cut out about 20% of sales tax revenues, leaving a big whole in the state general fund.
So the responsible burghers of western Michigan may have perceived the measure as (a) an ill-conceived populist measure that would require replacement by higher property or income taxes; and/or (b) a nefarious conspiracy by big-government liberals in Ann Arbor, Lansing, and Detroit to force imposition of a graduated income tax.
The Yes vote was especially high along the Wisconsin line of the Upper Peninsula. I bet Wisconsin had lower sales taxes on food, and there was a perception or reality that this was costing merchants in Michigan business. The same might be true for Cass County, where it would be an easy trip into South Bend for groceries, though this might also be due to food selection and prices.
