Legislature quickly takes up bills to prevent local taxes on food
The House and Senate Michigan Competitiveness Committees took up legislation this week that MRA has been working on to keep food and beverages tax-free at the local level. The bills, HB 4999 and SB 583, would preempt local units of government from implementing an excise tax or fee on food or beverages. The Senate committee reported SB 583 on Sept. 26 and the House committee plans to vote on HB 4999 on Oct. 4.
Local taxes on sugar sweetened beverages have most recently popped up in places like Cook County (Chicago) and Philadelphia. These taxes look and act like local sales taxes but are called an excise tax or fee. In Michigan, local sales taxes are prohibited but an excise tax or fee could still be implemented. The Michigan legislation seeks to clarify that all food and beverages for both immediate and non-immediate consumption could not be subject to any kind of local tax or fee. The state would remain the only entity that is allowed to levy a tax or fee on food and beverages.
MRA has been quick to act to prevent local rules or taxes that would create a complicated patchwork of regulations for retailers to navigate. In Cook County and Philadelphia, overall sales dropped and customers fled after local excise taxes and fees were adopted. These taxes have been incredibly confusing for retailers to implement and were adopted with limited guidance on how to administer them and with minimal time to train staff and make the necessary adjustments to point-of-sale systems. This confusion and poor implementation even jeopardized food assistance programs for low-income individuals in Illinois, where the county suggested retailers incorrectly charge and refund customers paying with federal SNAP (Supplemental Nutrition Assistance Program) benefits. Sadly, the customers most harmed by these local, regressive taxes on food are often those who can least afford it. They are the same customers who are also less likely to be able to travel to another store in a jurisdiction where there is not an added tax on food or beverages.
Thanks to the numerous reasons to avoid local taxes on food and beverages outlined above, the legislation has broad, bipartisan support and a large coalition of supporters, including business organizations, labor organizations, agriculture and commodity organizations, and labor groups. The definition of “food” in the bills mirrors the federal definition used in the Food, Drug, and Cosmetics Act (“Food” means articles used for food or drink for humans or other animals, chewing gum, and articles used for components of any such article) and includes pet food, animal feed, and alcohol. Legislative leaders understand that it’s imperative these bills move quickly through the legislative process to prevent local governments from seriously considering any new taxes or fees on food or beverages. Next step: SB 583 heads to the Senate floor. The House Michigan Competitiveness Committee will vote on HB 4999 on Oct. 4. | MRA Position: Support.
Senator introduces bill to increase property taxes
Legislation that is similar to a House bill (HB 4397) that would discourage property tax appeals by increasing the cost and length of the appeal was introduced on Sept. 19 as SB 578. The Senate legislation is slightly different in that it would require the entity that reviews property tax appeals, the Michigan Tax Tribunal, to make an independent determination of a property’s true value and detail how it came to that valuation. While that might not sound alarming, the bill would limit the comparable sales of similar properties the Tribunal could use to determine the market value of the property being appealed. The legislation includes so many restrictions against the use of “comparable sales” in determining a property’s value that it strongly favors use of the “replacement cost” valuation method. Replacement value can greatly overstate what a buyer would pay for a property.
Effectively, the bill seeks to slant the appeals process against taxpayers by pushing the Michigan Tax Tribunal to disregard the concept of True Cash Value, which is defined in the General Property Tax Act as the usual selling price. In addition, the legislation says it would only apply to appeals that appear before the full Tax Tribunal (exempting those before the small claims division), but it must apply to all tax appeals, including small claims, since the Michigan Constitution’s uniformity clause requires all property to be valued using the same methods. Next step: Senate Finance Committee. | MRA Position: Oppose.
Other important items to note:
- Alcohol reforms: The House approved legislation that modifies the delivery and sign requirements allowed for beer, wine, and spirits as SB 356–358 on Sept. 20. SB 357 allows retailers to seek refunds for beer, wine, and spirits from wholesalers under certain circumstances. Next step: SB 356 was amended by the Senate and must be reapproved by the House. SB 357-358 head to the governor’s desk. | MRA Position: Support SB 357, no position on the other bills.
- Half-mile rule: Proposed legislation that seeks to codify an anti-competitve rule referred to as the “half-mile rule,” HB 4504, will get a hearing Oct. 4 in the House Regulatory Reform Committee. The bill would put into statute a rule that the Michigan Liquor Control Commission (MLCC) is in the process of rescinding (the MLCC voted on Sept. 26 to continue the process of rescinding the rule). The rule prohibits liquor licenses at locations that are located within a half mile of another licensed business. MRA members have traditionally supported open markets and fair competition and strongly oppose any attempts to codify the rule into law. We’ve made our position clear to the chairman and committee members. Next step: House Regulatory Reform Committee hearing on Oct. 4. | MRA Position: Support MLCC rescinding rule 33. Oppose HB 4504.
- MLCC profit on liquor under production threshold: Legislation introduced as SB 579 on Sept. 19 seeks to grant the Michigan Liquor Control Commission a lower guaranteed profit margin on liquor if the distiller produces less than 60,000 gallons of liquor in a calendar year. Currently the MLCC receives a guaranteed profit between 51-65% of the sale price of liquor. The bill would change that to a profit of 20% or less on any bottles sold beneath the 60,000-gallon threshold. Next step: Senate Regulatory Reform Committee. | MRA Position: No position.
- 90-day prescriptions: The House Health Policy Committee reported legislation on Sept. 27 that would allow pharmacists to dispense a 90-day supply of medication so long as the prescription allows for enough refills to fill a 90-day timespan. SB 360 ensures that pharmacists will not have to call the prescriber for approval as currently required by some insurance plans. Next step: House floor. | MRA Position: Support.
- Opioids: The House Health Policy Committee heard testimony over the last two weeks on several bills MRA has been tracking. SBs 166–167 would require physicians to check the Michigan Automated Prescription System (MAPS) before writing a prescription. SB 270 and 273 would require prescribers have a bona fide physician-patient relationship before prescribing a Schedule 2 through 5 controlled substance and provide information on substance abuse services to patients being treated for an opioid-related overdose. SB 274 would implement new prescribing limits on opioids for chronic and acute pain sufferers. Next step: Further discussion and possible vote in the House Health Policy Committee on Oct. 4. | MRA Position: Support SB 274, neutral on the other bills.
- Administrative rules: HB 5048 introduced Sept. 28 would prohibit state departments and agencies from making new regulations referred to as rulemaking. Rulemaking is the process that allows for more detailed regulations to be made by state (and federal) departments and agencies after broader policy is set through legislation signed into law. Next step: House Michigan Competitiveness Committee| MRA Position: Under review.
- Biometric information privacy: HB 5019–5020, introduced on Sept. 27, would create the biometric information privacy act and regulate the protection and disclosure of personal information by internet and online service providers. Next step: House Commerce and Trade Committee.| MRA Position: Under review.
- Pediatric autoimmune disorders: Legislation introduced as HB 5031 on Sept. 27 would require coverage of certain pediatric autoimmune neuropsychiatric disorders. Next step: House Insurance Committee.| MRA Position: Under review.
- Security breach notification: Legislation introduced on Sept. 19 as HB 4983 would add additional notification requirements in the event an entity has a data breach. The bill would require an entity to post the notice provided to the state or federal government on its website (or a general description of the breach if a notification was not required by state or federal law), include the date the breach occurred, and maintain notices of any and all data breaches sorted by date. The bill also would require the entity provide all the information posted online to the state’s attorney general. Next step: House Insurance Committee.| MRA Position: Concerns, likely oppose.
- Sky lanterns: HB 5011, introduced on Sept. 26, would prohibit the sale and use of sky lanterns. Next step: House Regulatory Reform Committee.| MRA Position: Under review.
- Unemployment benefit fraud: Legislation that would require individuals to provide photo ID when applying for unemployment benefits was introduced as HB 5004 on Sept. 26. The bill seeks to address fraudulent unemployment claims made with stolen identities. Next step: House Commerce and Trade Committee.| MRA Position: Support.
- Alternative tax resolutions: Legislation that would allow taxpayers and the Michigan Department of Treasury to use new methods to resolve tax disputes was introduced Sept. 19 as HB 4976 and received a hearing in the House Tax Policy on Sept. 27. Next step: House Tax Policy Committee. | MRA Position: Under review.
- City income taxes: New legislation that would grant the Michigan Department of Treasury authority to collect the City of Detroit’s City Income Tax was introduced as HB 5025 on Sept. 27. Next step: House Tax Policy. | MRA Position: Under review.
- Sales/use tax on trade-ins: Legislation that would exempt rebates, discounts or other price reductions used as part of the payment on the purchase of a new car, boat or recreational vehicle was introduced as SB 587–588 on Sept. 26. Next step: Senate Finance Committee. | MRA Position: No position.
- Campaign finance: Gov. Snyder signed into law legislation on Sept. 20, SB 335–336, that in part, seeks to clarify that a contribution to a Super PAC does not require the contributor to also register as a Super PAC. The bills flew through the legislative process and were signed the same day they landed on the governor’s desk. The bills, in part, ensure contributors to Super PACs will not have to register individually. Next step: None. Signed into law as Public Acts 119 and 120 of 2017. | MRA Position: Support.
- Concealed guns in gun free zones: SB 584-586, introduced on Sept. 20 would allow individuals to apply for an indorsement on a concealed pistol license that would allow them to carry guns even in traditionally gun-free areas. SB 586 would also expand the list of local governmental entities that are not allowed to enact or enforce any restrictions on gun ownership. The list would expand to include school districts and public libraries, and includes a catch-all for any other local authority or political subdivision of this state. Next step: Senate Government Operations Committee. | MRA Position: Under review.