Tuesday hearing set for services-tax debate

The push to repel the recently passed sales tax on certain services is heating up in the Republican-controlled Senate with a Senate Finance Committee meeting set for noon on Tuesday to take testimony on Senate Bill 838 that will repeal the tax.

House Bill 5198, which imposed a 6 percent sales tax on some 60 services, only squeaked by the legislature in the wee hours of the morning on Oct. 1, averting a brief state government shutdown as the legislature wrestled with a $1.8 billon budget deficit on the day the state constitution says the budget must be approved. As soon as the tax was approved, individual businesses and business groups — led by the Michigan Chamber of Commerce’s “Ax the Tax” campaign – cried foul over the tax that hit business-to-business transactions hard and began doing whatever they could to stop the tax before it takes effect on Dec. 1.

Last week, on Nov. 1 the Senate approved Senate Bill 845 almost along party lines by a vote of 22-14 to delay implementation of the expanded service tax from Dec. 1 to Dec. 20. Many Democrats were upset because the bill — introduced by Sen. Cameron Brown, R-Sturgis, on Oct. 25 – did not go through the normal committee process.

“We compressed what should have taken seven months of work into one weekend, and now, lo and behold, we are here a month later trying to compress even less time into less time,” said Sen. Michael Prusi. “We take these important, complex and momentous issues and we compress our deliberations into a few people in a side room without any testimony from the affected people in the state.”

Continued – SB 838, which will repeal the tax, was introduced by Sen. Nancy Cassis, R-Novi, on Oct. 18, and the Finance Committee she chairs will hear testimony on the bill at noon in  Room 110 of Farnum Building in downtown Lansing.

“This is the first step on the path to repealing this ill-advised, job-killing tax,” said Sen. Kahn, R-Saginaw, in a press statement. “With approval of this legislation, we are that much closer to making sure this tax never has the chance to drive jobs out of mid-Michigan.”

The Senate is up against a deadline to get the bill passed, or House approval of the bill, in order to delay the implementation of the service tax because the legislature is set to take its annual two-week hunting break when it adjourns on Thursday Nov. 8. The legislature will not be back into session until Nov. 27.

Indications are that both sides of the aisle from both legislative bodies want to try and fine-tune the tax, but whether that gets done before the tax goes into effect remains to be seen. Discussions have been held about changing the Michigan Business Tax (MBT) that was approved last summer to replace the Single Business Tax to make up for the revenue needed so the sales tax on services can be done away with completely. However, there are numerous other options being tossed about in Lansing.