LANSING ? Michigan House Tax Policy Chair Rep. Steve Bieda (D-Warren) is working with business groups and others on potential legislation that would tighten definitions of the new tax on 26 categories of services that is to go into effect December 1.

Bieda, who has held several private sessions on the subject, said his work also includes addressing the issue imposing taxes on taxes, which some have complained could be a significant issue on many business-to-business transactions.

Bieda, who describes himself as not a fan of the services tax but who voted for the plan as a member of the House-Senate conference committee on HB 5198 , said at the earliest, he expects to have something in writing in two weeks.

He said what he develops could be written into law or could be incorporated in what the Department of Treasury is doing to provide guidelines on what is covered by the new services tax and what is not.

“We anticipated we would have to do clean-up on the tax,” Bieda said. “The biggest issue is that there is a lot of great areas. Businesses want to deal with a level of certainty.” He said it is reasonable to have legislators who wrote the services tax have a say in how it is implemented.

His goal is more “clarity, to make sure the tax is fair and to avoid double taxation,” Bieda said.

He said he has asked the groups attending the meetings to not just identify problems but come up with ways to address the problems. Some issues like how affiliates of businesses are taxed should be relatively easy to address, he added.

He said Treasury officials have been open about developing clearer definitions of the services that would be newly subject to the tax, with a lot of attention paid to the biggest single category: consulting.

Bieda said he would also be looking at some of the personal services categories to do away with some of the smaller ones which produce little revenue and which may be hard to enforce.

He does not expect to undercut the revenue estimates that officials built in to their calculations in the deal to resolve a $1.75 billion deficit in the 2007-08 budget. Bieda believes the $613.8 million estimate for the 10 months of the fiscal year it would be in effect are conservative and that as written the revenue could be somewhat higher.

Bieda has not yet consulted with other legislators in either house, but will as he gets closer to putting proposals to writing and hopes to have bipartisan support.

Meanwhile, the Senate Finance Committee has scheduled a meeting on Thursday to hear concerns from the business community about the tax.

Treasury spokesperson Terry Stanton said the department’s policy staff continues to work on providing information and guidance to businesses on the new tax. “We will be clearly delineating what is subject to the tax and what isn’t,” he said. He had no immediate comment on whether the department believes some of the definition questions should be addressed in legislation.

Stanton said while the department is discussing various issues surrounding the new tax with businesses, any changes would have to be revenue-neutral since Governor Jennifer Granholm has made it clear she is not interested in reopening the package for negotiation. “We’re willing to listen to any suggestions that folks might have to improve or better define the service tax,” he said.

He said he is not aware yet of any unintended consequences of the tax, and that the department stands by the revenue estimates which are based on census and revenue codes.

SERVICE TAX REPEALER: Sen. Cameron Brown (R-Fawn River Twp.) and Rep. Dan Acciavatti (R-Chesterfield) beat the band by having the first of what could be several bills repealing the service tax extension read into the process on Wednesday. Brown’s bill, SB 824 was sent to the Senate Finance Committee; Acciavatti’s bill, HB 5280 which has 38 co-sponsors, was sent to the House Tax Policy Committee. Both had voted against the measure. In introducing SB 824, Brown said the tax would cost the state jobs. The tax is to take effect December 1.

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