Senate knocks out MBT surcharge and 'tax on a tax'
The Michigan Senate passed two major reforms to the Michigan Business Tax (MBT). Senate Bill 1038, which passed 27-11, fixes the definition of gross receipts to remove taxes or surcharges. The bill, in essence, gets rid of the “tax on a tax” situation.
The Senate also passed SB 1242, which would phase out the MBT surcharge over a three-year period. The 21.99-percent surcharge resulted from the notorious sales tax on services that was quickly repealed after enactment. The surcharge is estimated to bring in approximately $700 million per year. Democrats who did not vote for the phase-out cited the structural problems that would result from not replacing this revenue. Supporters argued that Michigan cannot afford not to provide tax relief for state businesses.
The bills now go to the Democratic-controlled House. Discussions with lawmakers in the lower chamber reveal that there is more support for the gross receipts definition fix than for the surcharge phase-out.
Electronic recycling sent to Senate floor
Senate Bills 897 and 898 passed from the Senate Natural Resources Committee. The bills put in place a system for manufacturers of covered electronic devices to recycle these products starting April 1, 2010.
The bills do not require retailers to report their sales data on covered items to manufacturers or the state, as proposed by the manufacturing community. Instead, the system will use national sales data, broken down for Michigan.
The bills received unanimous support from the committee after the most recent drafts were changed to include printers as a covered electronic item after April 2011. The bills are expected to pass the Senate after any additional concerns are addressed in a final workgroup to be held next week.
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