LANSING – Business groups are watching eagerly to see how much money the new Michigan Business Tax raises in the first quarter of 2008. While, they don’t like paying any more for taxes, if the tax collects more than projected, business groups hope that will trigger a move to end the MBT surcharge.

An administration official said it is too early to focus much attention on any changes to the MBT. The first quarter payments are due on April 15 and even then it will take businesses and the state the rest of the year to get used to the new tax system.

But the Senate sponsor of legislation that would phase out the surcharge on the MBT said the best chance of his bill, SB 1242 , passing is with the MBT collecting more than anticipated.

Critics of the tax, which was passed last year to replace the Single Business Tax, have charged that it would end up raising more money than the SBT even though it was supposed to have been revenue neutral with the SBT.

There have been a number of reports of companies finding themselves paying significantly more under the MBT than they did under the SBT.

However, when the MBT was adopted it was anticipated that 70 percent of Michigan businesses would see no change or a cut in their overall tax payment. Sen. Mark Jansen (R-Gaines Twp.), sponsor of SB 1242, joked that he wondered if those companies that were getting a break were laying low while those paying more were the ones complaining.

The surcharge to the MBT was adopted last fall to replace a sales tax on services that the Legislature had adopted to try to keep the 2007-08 budget balanced.

Jansen’s bill would eliminate the surcharge by one-third, cutting state revenues by approximately $130 million a year, for three years.

The Michigan Chamber of Commerce, among other groups, is calling for reaction and information from its members on how they have fared under the new MBT. The Chamber intends to collect information from its members for at least another week before releasing their findings.

That, along with the first quarter payments under the MBT, should prove that the tax is not revenue neutral but actually an overall tax increase, said the Chamber’s Executive Vice President Rich Studley.

Their members have found the tax “more complicated than the old tax and more burdensome,” Studley said.

Sarah Hubbard of the Detroit Regional Chamber said some companies do appear to have done well under the MBT but others have been hit hard.

And there are details to the MBT that companies want to see revised and repealed.

But all companies want to see the surcharge lifted, Hubbard and Studley said.

Though the SBT has been repealed, companies are still making their final payments under the tax.

So far, collections under the MBT have been very small. The state collected just $4 million in February. Jay Wortley, senior economist for the Senate Fiscal Agency, estimated that the tax may have raised $49 million in March.

April will be a key month for establishing how much the tax may raise, said Leslee Fritz, spokesperson for the State Budget Office, and whether it is on the mark with what state fiscal experts anticipated. Companies are required to make their first quarter estimated payments by April 15.

But Wortley said throughout the year companies and the state will have to get adjusted to the tax, and that payments may vary through the year as accountants and business owners determine what provisions apply to their companies and which do not.

Jansen said that unless he can develop proposals for state spending reforms that will be acceptable to legislative Democrats the only practical way SB 1242 could pass is if the MBT raises more money than anticipated. “To get it through the House Democrats, I think it will,” he said.

There is no schedule now for a vote on the bill, Jansen said, and he intends to hold discussions with Senate and House members about the bill. But passing it would send a powerful, positive signal to all Michigan businesses that state government intends to help them out, he said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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