October 15, 2007
Group Mobilizing to Eliminate Tax on Services
Less than two weeks after a government shutdown ended after only four hours, business groups are calling for an overturning of the recently passed sales tax on discretionary services. The tax on services was part of the three-pronged approach to balance the budget, along with an income-tax increase from 3.9 percent to 4.35 percent and government reform.
The requirement to collect 6-percent sales tax on services goes into effect December 1 and is expected to raise approximately $750 million in its first year.
Loosely labeling itself as the Coalition to Repeal Sales Tax on Services, the group has been meeting with elected officials to gauge their level of interest in either passing legislation overturning the law or putting the issue on the statewide ballot for voters to decide. While there appears to be widespread sympathy from legislators, it may be difficult to get legislative leaders to take up the issue, especially during department budget negotiations.
A Senate Finance Committee meeting to take testimony on a senate bill repealing the measure was cancelled just prior to its scheduled time last Thursday.
MRA was present at the coalition’s first meeting and will continue to analyze the potential for either making changes—especially to retail landscaping businesses—or for overall repeal. Notably, some have called for increasing the sales tax on tangible property from 6 percent to 7 percent to pay for repealing the sales tax on services. Clearly, MRA does not favor this approach as it further widens the gap between brick and mortar stores and the Internet.
A list of services to be taxed follows:
• Carpet and upholstery cleaning services, as described in NAICS industry code 56174
• Business service center services, as described in NAICS industry code 56143
• Consulting services, as described in NAICS subsector code 5416
• Investigation, guard and armored car services, as described in NAICS industry code 56161
• Investment advice services, as described in NAICS industry code 52393
• Janitorial services, as described in NAICS industry code 56172
• Landscaping services, as described in NAICS industry code 56173
• Office administration services, as described in NAICS subsector code 5611
• Other personal services, as listed in NAICS industry code 812990
• Other travel and reservation services, as described in NAICS industry code 56159
• Scenic transportation services, as described in NAICS subsector code 487
• Skiing services, as described in NAICS industry code 71392
• Tour operator services, as described in NAICS industry code 56152
• Warehousing and storage services, as described in NAICS subsector code 4931
• Packaging and labeling services, as described in NAICS industry code 56191
• Specialized design services, as described in NAICS industry group code 5414
• Transit and ground-passenger transport services, as described in NAICS industry group code 4853
• Courier and messenger services, as described in NAICS subsector code 492
• Personal care services, as described in NAICS industry group code 8121, except hair care services
• Service contract services in which the seller, in exchange for the buyer's single payment, agrees to provide repair, maintenance, or replacement of one or more items of tangible personal property during a specific period of time, which services the buyer is not required to buy in connection with the purchase of tangible personal property
• Security system services, as described in NAICS industry code 56162
• Document preparation services, as described in NAICS industry code 56141
• Mini-warehouse services and self-storage unit services, as described in NAICS industry code 53113
Gift Card Bills Receive Abbreviated Hearing
A package of bills aimed at further regulating gift cards and gift certificates was debated briefly this week in the House Commerce Committee. House Bills 4050, 4317 and 4680 collectively would eliminate the use of dormancy fees and expiration dates, and would require the retailer to post their terms and conditions any place gift cards are displayed, including on the receipt.
MRA opposed the bills in committee, and continues to educate House members about the Senate-passed package, toward which MRA is neutral. The Senate package also eliminates the use of a dormancy fee and calls for an expiration date no earlier than five years, but eliminates the need to escheat the remainder of the card’s value to the state. While this is certainly not a great package, MRA believes it to be the best compromise available, given the current political realities.
The House Commerce Committee is meeting again this Tuesday to take additional testimony on the bills. There is a good chance the bills will pass from committee, because Democrats hold the majority in the House and have sponsored the legislation. Stay tuned for further developments.
Interior Design Bills Pass House
A package of bills giving interior designers professional standing with local building and zoning officials passed the House this week. The bills are controversial as they pit interior designers against architects and engineers.
The bills basically say unlicensed individuals cannot represent themselves as interior designers if they do not meet the licensing requirements. MRA remained neutral on the bills after winning a retail exemption stating that a retail employee providing interior design services on the premises of a retail establishment or to further a retail sale would be exempt. The bills face an uncertain future in the Senate.
KEY BILL INTRODUCTIONS:
SB 702, sponsored by Sen. Jason Allen (R-Traverse City), to allow under certain conditions sale of certain consumer items without item pricing.
SB 717, sponsored by Sen. Gilda Jacobs (D-Huntington Woods), to modify certain criteria regarding pharmacy labeling.
SB 718, sponsored by Sen. Jacobs, to modify penalties for retailers for sale of tobacco products to minors.
SB 761, sponsored by Sen. Judson Gilbert (R-Algonac), to provide credit for expenses incurred to originate a deposit on a beverage container.
SB 764, sponsored by Sen. Liz Brater (D-Ann Arbor), to provide for general amendments.
SB 765, sponsored by Sen. Brater, to provide for general amendments.
SB 766,767, sponsored by Sen. Brater, to eliminate certain exemptions.
SB 768, 769, sponsored by Sen. Brater, to provide for general amendments.
SB 770, 771, sponsored by Sen. Brater, to clean up single business tax references and rate provisions.
SB 774, sponsored by Sen. Michael Switalski (D-Roseville), to provide for allowing convention facilities development funds to be used for the general fund.
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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
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Lansing, MI 48933
517.372.5656
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