LANSING – One of the state’s biggest business organizations will oppose the Fair Tax, a proposal to eliminate most of Michigan’s taxes and replace them with a higher sales tax, saying that it could represent a major tax shift to individuals and companies. The board of directors of the Michigan Chamber of Commerce voted overwhelmingly to oppose the tax proposal.

Supporters of the Fair Tax are trying to gather enough petition signatures to put the proposal on the November ballot.

While the Chamber’s directors voted to oppose the proposal, they have held off making a general announcement about their decision.

But Tricia Kinley, the Chamber’s tax expert, said opposition to the tax by the board was “overwhelming.”

While there are some attractive features of the proposal, it would mean a shift of more than $1 billion in taxes to Michigan residents and companies that out-of-state businesses now pay, she said.

And the increase in the state’s current 6 percent sales tax, by 63 percent, will not help make the state attractive to businesses or tourists, Kinley said.

Rep. Fulton Sheen (R-Plainwell), chief legislative sponsor of the proposal, said the Chamber’s decision was unwise. “Many of its members are very supportive of the Fair Tax,” he said. “At this point, the Michigan Chamber is leaning towards the largest businesses.”

And the state’s current position with the Michigan Business Tax could help drive support for the proposal, Sheen said. “It’s a tremendous hit they are taking with the MBT.?

Kinley said the Chamber board’s opposition to the Fair Tax “should not be construed that the current state of Michigan taxation is acceptable. The current state of Michigan taxes and spending is unacceptable.” But the Fair Tax is not the right solution for the state, she said.

Judy Putnam with the Michigan League for Human Services, which also opposes the Fair Tax, agreed with many of the criticisms made by the Michigan Chamber. Such a tax would likely drive more people to shop by the Internet or out of state, and it could leave the state with a big revenue hole, she said.

The Small Business Association of Michigan, however, has been a vocal supporter of the Fair Tax proposal.

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