DETROIT – Saying Michigan’s Single Business Tax, or any separate specific tax for business, would make the state anti-competitive, the Detroit Regional Chamber of Commerce is calling for the state to eliminate the tax now. Raising revenues from businesses should be based on annual license fee assessed on the basis of the businesses’ sales, the organization argues.

Such a fee would raise $500 million less than the SBT does now under the concept proposed by a task force of the chamber. An official for the chamber said the state could adjust those fees by any level it wished, which could theoretically recoup any lost revenues, but Dan Smith said the chamber felt the $500 million revenue loss was an appropriate cut.

The proposal has actually been in discussion for several years, Mr. Smith said, and is being looked at by several members of the Legislature, though he did not say who.

A spokesperson for Governor Jennifer Granholm said the chamber shared their proposal last summer.

“It has the advantage of being simple to understand, but it holds significant disadvantages for many taxpayers,” said Liz Boyd.

The SBT is already scheduled to expire at the end of 2009, and the chamber’s task force said that shows state government “already recognized the negative effect of the SBT.”

Ending the tax “sooner will stimulate Michigan’s economy by creating jobs. The SBT is an onerous, complicated tax that serves as a disincentive to economic growth. Furthermore, the SBT falls disproportionately on the foundation of Michigan’s economy, namely manufacturing,” the task force report said.

An SBT tax cut aimed largely at manufacturers was signed into law last month and is projected to save as much as $600 million for businesses over a four-year period.

Ending the sunset on the tax turned into a major fight between the Legislature and the Executive Office late last year. In arguing the tax should be continued, the administration said eliminating it would either push more taxes down on consumers or force them to suffer drastic cutbacks in services.

The task force paper argues that even without the SBT, businesses will continue to pay tax in the state, both state and local taxes. The task force argued businesses pay some 34 percent of all taxes collected, approximately $11.6 billion.

The licensing fee proposal by the chamber would exempt any firm with annual sales of less than $350,000 from a fee. From $350,001 to $500,000, a company would pay $1,000 annually.

The size of the fee would range from $1,000 to no more than $1 million, assessed companies with annual sales of $100 million or more.

The chamber projected that would raise $1.5 billion, the largest share of that, $612 million, from firms assessed $1 million.

The chamber said the proposal is simple to administer, provide stable revenue, and promote compliance.

If the SBT is not repealed, then the chamber proposed that a number of new cuts be made to the tax including eliminating the compensation add-back, moving to 100 percent sales factor apportionment (which Ms. Granholm proposed last year. The apportionment is scheduled to increase to 95 percent), boosting the investment credit in the tax, creating a new research and development tax credit, eliminating the inclusion of depreciation expenses and simplifying overall compliance with the tax.

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