Cover Story
MACPA Task Force Studies Sales Tax on Services
 
In late October, House Bills 5527, 5528, 5529 and House Joint Resolution KK were introduced in the Michigan House of Representatives. This legislative package seeks to expand the Michigan Sales and Use Tax base to include all services, reduce the rate from 6% to 5% and eliminate the surcharge on the Michigan Business Tax (MBT).

While this legislative package appears to provide four exemptions to the broad-based service tax – services provided to a business, educational services, services provided by a physician, and services provided to a nonprofit – it is lengthy and complex and will require analysis. The MACPA State & Local Tax Task Force Subcommittee on Business Tax Restructuring (the same experts that have been leading the MACPA’s efforts on the MBT since its enactment), has refocused its efforts to the examination of this legislation and its potential effect on the nearly 18,000 members of the MACPA statewide.

The political dynamics in Lansing are extremely unpredictable; however, as it stands today pundits do not expect formal movement on significant tax reform prior to year’s end. It is also important to note that neither the House leadership nor the specific sponsor of this proposal have immediate intentions on moving the package as is. However, 95% of all tax reform conversations in Lansing include two elements – service tax and surcharge repeal. This legislative package is seen as a viable vehicle to reform.

The first step for the MACPA is to illustrate factors that must be considered in such a substantial change in tax structure through communication to policy-makers. Business Tax Restructuring Subcommittee members are in the process of finalizing technical observations to compliment the MACPA’s White Paper from the 2007 debate on the same issue.

Watch MACPA E-News for any immediate updates – and provide your input at legislation@michcpa.org.


Top