Members of the Michigan Legislature have finally realized the errors of their ways (passing a services tax in the wee hours of the morning on October 1) to balance the budget. Of course we told them this was a major mistake while they were considering it. The service tax – which will bring in $750 million dollars – includes 35 pages of NAICS codes. (This list can be found by going to www.buildingmichigan.org).
Several committee meetings and meetings with legislators have been taking place over the last two weeks along with legislative action and the kick off of the AX the TAX Coalition. This update will bring you up to date on all of the happenings surrounding the services tax issue. Please make sure you read to the bottom of this update to take part in an important survey.
Since the signing into law of the services tax by Governor Jennifer Granholm, several bills have been introduced to repeal the services tax. Public Act 93 of 2007 will go into effect on December 1, 2007, unless a bill with a later implementation date is passed or the act is repealed all together. So, where do we stand on either of those actions (both by the way are supported by the MAHB)?
In terms of the bills introduced to repeal the services tax, several have been introduced in the House and Senate. In the House, the following bills have been introduced to repeal the tax on services:
- House Bill 5280 was introduced by Representative Dan Acciavatti, a Republican from Chesterfield, and was referred to the Committee on Tax Policy.
- House Bill 5373 was introduced by Representative Dave Hildenbrand, a Republican from Lowell, and was referred to the Committee on Tax Policy.
In the Senate, the following bills were introduced to repeal the tax on services:
- Senate Bill 838 was introduced by Senator Nancy Cassis, a Republican from Novi, and that bill was passed out of Senate Finance on November 6, 2007 and is awaiting passage on the Senate floor. The MAHB voiced its support of SB 838 in the committee hearing on November 6, 2007.
- Senate Bill 824 was introduced by Senator Cameron Brown, a Republican from Sturgis, and was referred to the Senate Finance Committee.
In addition to the repeal bills that have been introduced, Senator Cameron Brown has introduced Senate Bill 845 which would extend the implementation date of the tax on services from December 1, 2007 until December 20, 2007. SB 845 passed the Senate and is up for a hearing TODAY (November 7, 2007) in the House Tax Policy Committee where the MAHB will be voicing its support.
Your Government Relations Team has been involved in the AX the TAX Coalition meetings and is actively gathering petitions to help in the ballot initiative to AX the TAX. Petitions are available by emailing Dawn Crandall at Crandall.dawn@mahb.com with your name, mailing address, telephone number and the amount of petitions you would like to receive in the mail. Full petitions will hold 15 signatures. Signatures on a single petition MUST come from the same county and be REGISTERED VOTERS to be valid.
A meeting took place yesterday with Senate Majority Leader Mike Bishop on the issue of repealing the tax on services and his comment to us was "stay close." The Legislature is scheduled to be in session this week and then off for the next 18 days as hunting season and Thanksgiving break begins. Whenever there are discussions with legislators on repealing the tax on services it is inevitable this question arises, "How do you suggest we replace the $750 Million dollars of revenue that will be lost in the repeal?"
There are several options and your Government Relations Team would like to know your feelings on this issue. As this could move this week, please email your suggestions to Crandall.dawn@mahb.com.
The options include:
- Increasing the Income Tax to 4.8% (as of October 1, 2007 it is at 4.35%)
- Having a vote of the people to increase the sales tax from 6 to 7% on those items taxed under the sales tax – no expansion.
- Having government do real cuts and reforms to the structure of state government
- Placing a surcharge on the Michigan Business Tax, this is the idea which appears to be gathering steam. For details on this plan, albeit sketchy, click here.
Should you have any questions, please do not hesitate to contact Dawn Crandall at 1.800.748.0432 or by email at Crandall.dawn@mahb.com.
