ACTION NEEDED: Legislators Look to Replace Service Tax with Increased MBT; Corporate Taxes Would Skyrocket 30%
The House voted yesterday to eliminate the state’s controversial new service tax and replace it with a special 30-percent surcharge on the new Michigan Business Tax (MBT). The state Senate is currently working on its own replacement plan.
According to the House proposal (click here to download details ), construction companies would be able to deduct the cost of materials and subcontractor costs before determining their tax base, however, the new surcharge would add an additional 32.9 percent to their MBT tax liability in 2008 and set the rate at 27.3 percent beginning in 2009. This proposed change would erase all the gains MITA fought so hard for in the corporate tax debate this summer and fall.
MITA says this huge tax increase would have disastrous effects on the state’s construction industry.
“The Legislature’s haste to create a controversial job-killing service tax is only outdone by making the same mistake with a 30-percent surcharge”, said Mike Nystrom, vice president of government and public relations for the Michigan Infrastructure and Transportation Association. “There has not been enough time for job providers to realize how devastating this new tax would be.”
As written, the legislation includes a cap that allows companies to pay no more than a $2 million surcharge, effectively forcing small and medium-size companies to subsidize big business. MITA says that it is only fair that the Legislature eliminate this cap and lower the tax rate accordingly in order to level the playing field.
MITA is urging members to contact their legislators’ offices today to tell them what another 30-percent increase in the MBT would do to their business. Members are also encouraged to communicate with MITA staff on your communication and progress.
If you have any questions please contact Mike Nystrom, Vice President of Government and Public Relations at mikenystrom@mi-ita.com; or Keith Ledbetter, Director of Legislative Affairs at keithledbetter@mi-ita.com ; or by calling the MITA office at (517) 347-8336.
