LANSING – The Michigan Chamber of Commerce is opposing all but one of Governor Jennifer Granholm’s nine proposed tax exemption eliminations, saying the measures would harm the affected businesses’ ability to compete.
Granholm has recommended the $112 million in eliminations of exemptions to certain taxes as part of her strategy to close a $773 million gap between available revenue and existing spending in the state’s general fund although nearly half of the exemption removals would aid the school aid fund.
The changes include some items used frequently by the public – removing the sales tax-exempt status of food purchased from vending machines. And they include the obscure: eliminating a reduced tax rate for marginal oil wells.
But the Chamber, in opposing all of the proposals except the call to apply the sales tax to prisoner purchases, cited a common theme that the measures would harm affected businesses.
Ending the reduced tax rate for marginal wells could cause them to shut down, and applying the sales tax to food from vending machines, but not from stores is unfair, the Chamber said.
And the Chamber was particularly critical of Granholm’s proposal to apply the use tax to toll-free numbers, WATTS services, interstate private networks and international calls. Applying the tax would discourage large, multi-state businesses from locating in Michigan.
“The Michigan Chamber is strongly opposed to raising taxes or fees to balance the state budget,” the group said in its analysis. “Contrary to the administration’s characterization, these tax credits and exemptions are based on sound tax theory and reflect legitimate public policy goals.”
The other proposed tax changes include:
Railroad credit – eliminate utility property tax credits for maintenance and improvements of rights of way and for railroad cars.
Interstate truck/trailer/parts – apply sales/use tax to trucks, trailers and parts used in interstate commerce to the portion occurring in Michigan.
Publicly-screened films – apply the sales/use tax to copyrighted films leased or purchased for public viewing.
Oil/gas royalties – remove a double deduction that oil and gas producers have been able to take through a deduction from state adjusted gross income of indirect costs such as depreciation plus an income tax exemption for oil and gas royalties that are subject to the state’s severance tax.
Water softener/coolers – apply the property tax to companies leasing or renting water softeners to residences or bottled water coolers to residences and commercial facilities.
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