2008 Woodie Awards
Surcharge to replace sales tax Jan. 1
Senate, House agree to approve bill, which could raise $750M
By: Maria Spicketts
Issue date: 12/3/07 Section: News
- Page 1 of 1
When the four leaders of Michigan's legislature came to Central Michigan University for a forum last month, they agreed on one thing: The new service tax should, and will, be changed.
They were right, but negotiations were not fast enough to avoid the tax being implemented - at least technically.
The six percent sales tax increase on services went into effect Saturday morning, but was repealed Saturday afternoon once the state House agreed to a bill approved by the Senate. There is no penalty for businesses that did not collect the tax and rebates for those that did.
In place of the sales tax, there now is a 21.99 percent surcharge on business that will pay the Michigan Business Tax. The MBT goes into effect Jan. 1.
Approximately $750 million is expected to be collected during the 2008-2009 fiscal year. A $6 million cap on any single business was placed on the bill, which Gov. Jennifer Granholm signed into law Saturday after much deliberation in the Michigan legislature.
Rep. Bill Caul, R-Mount Pleasant, said the new tax is a surcharge of the Michigan Business Tax and will expire in 2017.
"Everybody agrees the service tax is bad for Michigan, and we want to get rid of it," he said. "The downside is it increases the tax on 60,000 small and medium-sized businesses."
The main sticking points of debate were what to replace the rejected service tax with, and for how long the replacement tax should last.
Caul said Republicans want the tax to end in 2011, while Democrats want it to be permanent.
"In four years, we can re-examine it," he said. "I think it's only correct (that) we look at it in another four years, if there is a way to benefit Michigan businesses. The House version says it will be a permanent tax on the citizens of Michigan, and the Senate version does not."
In a statement, Granholm said the law is a fair and reasonable compromise.
"This agreement protects health care, public safety and education while replacing revenue from the service tax," she said.
The service tax initially went into effect as a result of the state's earlier budget crisis, in which Michigan's government temporarily shut down after a $600 million dollar hole in the budget was not filled.
Granholm had previously said she would not sign a replacement bill for the service tax unless it was a complete substitution, the new plan is expected to raise just as much money as the rejected sales tax would have.
The Associated Press contributed to this report.
news@cm-life.com
They were right, but negotiations were not fast enough to avoid the tax being implemented - at least technically.
The six percent sales tax increase on services went into effect Saturday morning, but was repealed Saturday afternoon once the state House agreed to a bill approved by the Senate. There is no penalty for businesses that did not collect the tax and rebates for those that did.
In place of the sales tax, there now is a 21.99 percent surcharge on business that will pay the Michigan Business Tax. The MBT goes into effect Jan. 1.
Approximately $750 million is expected to be collected during the 2008-2009 fiscal year. A $6 million cap on any single business was placed on the bill, which Gov. Jennifer Granholm signed into law Saturday after much deliberation in the Michigan legislature.
Rep. Bill Caul, R-Mount Pleasant, said the new tax is a surcharge of the Michigan Business Tax and will expire in 2017.
"Everybody agrees the service tax is bad for Michigan, and we want to get rid of it," he said. "The downside is it increases the tax on 60,000 small and medium-sized businesses."
The main sticking points of debate were what to replace the rejected service tax with, and for how long the replacement tax should last.
Caul said Republicans want the tax to end in 2011, while Democrats want it to be permanent.
"In four years, we can re-examine it," he said. "I think it's only correct (that) we look at it in another four years, if there is a way to benefit Michigan businesses. The House version says it will be a permanent tax on the citizens of Michigan, and the Senate version does not."
In a statement, Granholm said the law is a fair and reasonable compromise.
"This agreement protects health care, public safety and education while replacing revenue from the service tax," she said.
The service tax initially went into effect as a result of the state's earlier budget crisis, in which Michigan's government temporarily shut down after a $600 million dollar hole in the budget was not filled.
Granholm had previously said she would not sign a replacement bill for the service tax unless it was a complete substitution, the new plan is expected to raise just as much money as the rejected sales tax would have.
The Associated Press contributed to this report.
news@cm-life.com
Viewing Comments 1 - 1 of 1
michmediaperson
posted 12/03/07 @ 9:40 PM EST
A tax is still a tax.
Who are these politicians kidding?
How about cutting wasteful spending at CMU and the other universities and government departments and NOT raise any taxes. (Continued…)
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