LANSING – Among the proposals circulating to address deficits in the Michigan fiscal year 2007-08 budget is a constitutional amendment to increase the sales tax to 7 percent. But business groups were split Tuesday on whether that was a wise solution to the budget problems.

The Michigan Chamber of Commerce has opposed the 1-cent increase, arguing prior attempts to use the sales tax as part of the budget have been largely unsuccessful. But the National Federation of Independent Business said its members would see the sales tax increase as the least disruptive to their operations.

The proposal, which supporters hope to get before voters as early as November, would raise about $1.3 billion of the projected $1.8 billion deficit in the coming year budget.

“The history of the Milliken and Blanchard administrations were strewn with ballot proposals that used an increase in the sales tax to cut property taxes,” said Robert LaBrant with the Michigan Chamber of Commerce. “They crashed and burned repeatedly.”

He said asking voters to increase the sales tax to balance the state budget was also “doomed to failure.”

LaBrant said he had not heard any proposals that would, like Proposal A of 1994, give voters a choice between increasing the sales tax or increasing the income tax.

But Charles Owens with the NFIB Michigan said the largest group of his members, 48 percent, would prefer a sales tax increase to any other possible state revenue source. “While small business owners and NFIB believe strongly that the budget should be balanced without increasing taxes, an increase in the current sales tax rate appears to be the most palatable of all the options,” he said. “It is worth noting that support for the sales tax ballot option was double that of the next highest preference.”

Among NFIB members, 24 percent would prefer to see a graduated income tax, 17 percent an increase in the current income tax and 11 percent expanding sales taxes to include services.

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