Details Emerge on What is a “Taxable Service”
The construction industry dodged a major bullet this week during the state’s budget negotiations. All the way up to the 11th hour, the Legislature and governor were discussing adding a sales tax to a range of services. The industry that could have been hit the hardest—construction.
According to a Senate Fiscal Agency analysis, the construction industry would have seen a $372 million increase in taxes, had the plan been adopted. MITA has been lobbying hard in recent weeks, telling state policymakers that the industry was already suffering immensely from lack of infrastructure funding. MITA argued that such a tax on services would break the back of many road building and underground construction companies.
As details begin to emerge, the plan approved by the Legislature does include a 6 percent sales tax on a variety of other professional services. Click here for a copy of the new law. Consulting, landscaping and investment advising are just a few MITA-related services that will see a new tax. However, engineering, insurance and bonding and surveying appear to be exempt. The legislation cites specific industry classifications as published by the North American Industry Classification System (NAICS). Click here to see if your service qualifies under the statutory definition. The new tax is scheduled to go into effect December 1, 2007.
The victory on getting rid of the sales tax on construction is the second high-profile legislative victory in recent months. In June, MITA was able to reverse a deal by the House, Senate and governor that would have as much as quadrupled the corporate tax on construction companies.
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.
