March 26, 2007
Republicans Kill
Governor’s Tax on Services
Addressing the huge deficit the state finds itself in—a more than
$900-million hole projected for the current fiscal year and a projected
shortfall of over $1 billion in FY 2008—Governor Jennifer Granholm
issued a
new Executive Order on Thursday. It proposes $344 million in cuts, most
of
which come from higher education, corrections, community health and
human
services.
The Senate Appropriations Committee approved the cuts immediately; the
Democratic-controlled House has yet to vote on them. Meanwhile, insisting
that tax increases are not necessary to close the gap in this year’s
budget,
Senate Republicans killed the governor’s proposed two-percent tax
on some
services and declared tax increases for 2007 were “off the table.”
Senate Republicans also proposed their own “no-new-revenue”
budget plan.
About a third of the Republicans’ budget plan comes from immediately
adopting Granholm's $344-million order.
Tax Restructuring
Proposals On Hold
Although negotiations on the replacement for the Single Business Tax,
which
expires at the end of this year, stalled mid-week when no agreement
could be
reached between Granholm, Senate Majority Leader Mike Bishop (R-Rochester)
and House Speaker Andy Dillon (D-Redford), several SBT replacement plans
remain on the table.
The Michigan Chamber of Commerce is advocating a plan, contained in
Senate
Bill 151, sponsored by Sen. Jud Gilbert (R-Algonac), that uses the concept
of a business license tax, based on gross receipts. It includes:
• Business income tax rate: 3.05 percent
• Business license tax rate: 0.48 percent (general); 0.24 percent
(wholesale/retail) paid on the excess gross receipts above a $350,000
threshold
• $150 minimum tax (applies to businesses with employees)
• 50-percent personal property tax credit for all industries (issued
as a refund)
• $2-million cap per return on (gross receipts) license tax
Emerging in the late stages of the game is a plan being shopped by various
business groups, dubbed the “6 plus 6” plan. It calls for
a 6-percent tax on
most services, including business-to-business services, in exchange
for no
state business tax at all (no replacement for the SBT) and a reduction
of
the income tax by as much as 1 percent, from 3.9 percent to 2.9 percent.
In addition, “6 plus 6” would reduce the personal property
tax by 24 mills.
This plan may be gathering some momentum, as getting rid of a business
tax
altogether would be seen as a net tax break for companies and a move
mainly
to a consumption-type tax.
Gift Card Regulation
on Legislators’ Minds
Regulating gift cards and gift certificates is the purpose of at least
two
bills introduced this legislative session. With the increased usage
and
visibility of gift cards, regulating them has become a populist issue,
especially with the news media’s focus on customers who feel they
have been
treated unfairly regarding expiration dates and activity fees.
Senate Bill 274, sponsored by Sen. Gretchen Whitmer (D-East Lansing),
makes
it illegal for a gift card or gift certificate to have either an expiration
date or an activity fee associated with it. A House bill sponsored by
Rep.
Fred Miller (D-Mount Clemens) seeks a different resolution by focusing
on
informing the consumer about the terms and conditions that apply to
the gift
card or gift certificate.
Retailers would have to notify the consumer if a gift card is good only
during a certain period of time, such as only during weekdays. The retailer
would also have to post a sign that states that terms and conditions
are
applied to gift certificates and cards. If the retailer sells the gift
card
or certificate via mail or electronically, the terms and conditions
would
have to be disclosed prior to the sale. The retailer also would have
to
disclose the terms and conditions on either the certificate or the envelope
or packaging containing the card if a toll-free number is used to access
the
terms and conditions.
A retailer also would not be able to charge a monthly service fee prior
to
the 13th month of dormancy and must apply the remaining balance to a
purchase, even if the purchase amount is more than the value remaining
on
the card or certificate, a practice almost all retailers already follow.
Either of these bills could move in its chamber, as this issue is not
as
controversial as in previous years. MRA will continue to monitor and
represent retailers’ interests on this issue to ensure that both
the
customer and retailer are treated fairly.
Credit Freeze
Bill Moves
The House passed unanimously a bill allowing state residents to block
access
to and put a security freeze on their credit information for any reason.
The
bill would prohibit credit agencies from charging more than $20 to freeze
the customer’s report and would let customers limit access to their
records
through the use of a PIN number.
The bill is an effort to protect consumers’ credit information
and limit
identity theft. The freeze on the customer’s account would remain
in effect
until the customer chose to remove it. The bill specifies that seniors
and
victims of ID theft would not have to pay the fee to freeze their credit
report.
The bill is now before a Senate committee, where it could be taken up
this week.
KEY BILL INTRODUCTIONS:
No Bill to Introduce at this Time.
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Specific comments or questions regarding this bulletin
should be directed to:
Kathleen Wilson, Administrative Assistant to the Governmental Affairs
Office at
kawilson@retailers.com.
Michigan Retailers Association
603 South Washington Avenue
Lansing, MI 48933
517.372.5656
Toll-Free: 800.366.3699
Fax: 517.372.1303
govt_affairs@retailers.com
www.retailers.com
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