LANSING – With an expansion of the service tax set to go into effect on Dec. 1, House Democrats today called on the Republican-led Senate to act on a plan passed by the House on Nov. 8 that will repeal the 6 percent tax on services. If the Senate fails to approve the plan, the service tax will be effective as of Dec. 1.
"When business leaders from across the state expressed concern about the impact of the service tax, House Democrats acted quickly to find a solution and took action to repeal it," said House Speaker Andy Dillon (D-Redford Twp.). "Business leaders and lawmakers from both sides of the aisle in the House worked together to craft a plan that promotes economic growth while protecting essential funding for our schools, public safety and health care for our seniors. I urge the Senate to act quickly to approve this bipartisan plan to repeal the service tax."
The proposed service tax expansion was created as a compromise measure in order to get a budget passed by Oct. 1 and stave off a massive government shutdown. Responding to the business community's concerns over the expansion, the Michigan House passed a plan on Nov. 8 that repeals the measure before it goes into effect on Dec. 1.
Democratic leaders worked closely with Michigan's business community and lawmakers from both parties to forge a consensus that will move Michigan's economy forward while protecting essential funding for services such as education, health care, and police and fire protection. Under the plan passed Nov. 8, an additional surcharge will be added to the Michigan Business Tax. The plan has garnered support from businesses and organizations across the state, including the Detroit and Grand Rapids Chambers of Commerce, the Michigan Manufacturing Association, the Big Three automakers, AT&T, the Kellogg Co. and Northwest Airlines, among others.
A study released by the Detroit Regional Chamber of Commerce found that businesses could spend $14 million a day from Oct. 1 to Dec. 1 to be prepared to comply with the service tax expansion.
"Taking action now will save businesses millions in transition costs," Dillon said. "The House did what had to be done to repeal the service tax expansion; the ball is now in the Senate's court. This plan has bipartisan support in the House, but more importantly, it has the support of our business community. Dec. 1 is right around the corner – the Senate has no time to waste."