LANSING – By the end of this week, it is possible that a bill repealing Michigan’s new sales tax on services will have passed one house, but how much progress will be made to replacing the tax is less certain.

Some sources said more interest is coalescing around the proposal to create a surcharge for some businesses in the new Michigan Business Tax, but that business groups are still uncertain if that will be the best alternative to the tax, which is now still set to begin on December 1.

One day after all state attention was clearly focused on the issue, officials were still saying they needed to see someone else move on an alternative tax to the services tax.

But the Senate is likely to act on SB 838 that would repeal the service taxes. The Finance Committee is slated to meet on the bill on Tuesday and officials say the Senate will likely vote on the bill by the end of the week.

The Senate on Thursday approved SB 845 , which delays implementation of the services tax until December 20 and ties-bar the bill to SB 838.

The House Tax Policy Committee has not yet scheduled any kind of meeting, but officials said they anticipate some kind of meeting.

House officials could not be reached on what may be planned in that chamber. Several people interviewed said rumors keep swirling over various activities.

A spokesperson for Senate Majority Leader Mike Bishop (R-Rochester) said Senate Republicans expect House Democrats and Governor Jennifer Granholm to come up with a proposal to replace the tax.

But a spokesperson for Granholm said the administration expects businesses to provide a proposed solution, in part because it is business driving the effort to end the services tax.

Some groups have proposed the surcharge on a company’s MBT assessment. The surcharge would be based on the tax assessment before the assessment is reduced by credits, and as currently proposed would be between 20 percent and 25 percent of a company’s assessment.

The proposal is aimed at businesses with annual gross revenues in excess of $1.8 million.

But some officials said they still worry that small businesses could be affected by the surcharge proposals because there are alternative ways that a small business could still pay the MBT, particularly on the basis of a company’s top officer’s income.

Other business group officials said they are not giving up on the idea of the state cutting spending.

Even though Granholm has said any replacement for the services tax has to be revenue neutral and Bishop has said essentially the same thing, one business official said the idea of cutting spending is a business response and plan. That would partly meet the governor’s call for business to develop a proposal, this person said.

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