LANSING ? Gov. Jennifer Granholm’s proposal to reform the Single Business Tax cannot succeed in the Legislature without business support, and Treasurer Jay Rising said his task now is to make sure businesses understand all the aspects of the proposal before they decide on support or opposition.

“We know from experience that this is a process,” Rising said in an interview with Gongwer News Service, and as long as the message continues and is accepted that the proposal is not an overall tax hike, that for most businesses it is a tax cut, that it injects greater fairness into the system and protects capital from leaving Michigan, then he is hopeful it will win legislative approval.

The proposal, unveiled last week, cuts the SBT rate from 1.9 percent to 1.2 percent, provides a Personal Property Tax credit for many businesses, changes the apportionment formula so that the SBT is weighted entirely on sales and recoups the lost revenue from those cuts by eliminating a number of credits and deductions – such as the credit for unincorporated businesses – and by setting a 2 percent tax on insurance companies.

Rising said he and other officials met with a number of businesses and business groups in the days before the announcement to outline the proposal to them, and he has been meeting with groups since then. He said he or other Treasury officials will meet with any organization that wants to go over the structure of the proposal.

Rising said he wants to hear from anyone who questions whether the proposal is truly revenue-neutral and review their assertions. There was never an intention for the proposal to be anything but revenue-neutral, he said.

And when the proposal was announced, Rising said there were some manufacturers who might see increases, though most manufacturers would not.

So far, manufacturers have been the biggest supporters of the proposal while the insurance industry has been the most intense opponent.

It is critical that business understand the effect the proposal would have on all sectors, Rising said. Even though insurance would see tax increases – and the industry is warning that the changes would mean policy increases for consumers – it would mean Michigan would go from 47th in overall taxation of insurance companies to about the middle of all the states.

Currently the SBT is due to expire in 2010, and when he began working on the proposal, Rising was surprised that there wasn’t a rush of businesses urging the state go ahead and let the tax die. There were some that did with the expectation the economy would grow to recover the lost revenue.

But some executives and tax experts were worried with what might replace the SBT. And many said they understood the SBT and how it worked, even though there were portions they disliked.

The biggest complaint came over the state’s Personal Property Tax, Rising said, and the effect both it and the SBT could have on easily portable capital, especially the ability of manufacturers to move operations out of the state.

In writing the proposal, Mr. Rising said, it was critical to recreate a business tax that did not pick winners and losers. And that is what the SBT had evolved into, he said.

“I kind of came away with the conclusion that we were nearer to consensus from businesses that if the SBT could be modified so if the state still got the stability, the SBT was more profit sensitive and it dealt with the personal property tax,” he said, then business might support it.

Still, the process of writing the changes was “like building a house without a tape measure,” he said.

And when the proposal was completed, the department was surprised it could come up with something that was both revenue-neutral and still gave 75 percent of the businesses a tax break.

While the administration wants the proposal enacted this year so that it will take effect in 2006, Rising said it would not be fatal if the proposal were not enacted until 2006. But it is better to move quickly to provide businesses with the knowledge they will need to do their tax planning and provide greater stability, he said.

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