"Are They Kidding?"
Friday, November 9, 2007
Posted by: Nancy Brown
The House voted yesterday to eliminate the state’s controversial new service tax and replace it with a special 30-percent surcharge on the new Michigan Business Tax (MBT), creating disastrous effects on the state’s construction industry.
“The Legislature’s haste to create a controversial job-killing service tax is only outdone by making the same mistake with a 30-percent surcharge,” said Mike Nystrom, vice president of government and public relations for the Michigan Infrastructure and Transportation Association (MITA). “There has not been enough time for job providers to realize how devastating this new tax would be.”
As written, the new surcharge would add an additional 32.9 percent to a company’s MBT tax liability in 2008 and set the rate at 27.3 percent beginning in 2009. The legislation, which needs approval in the Senate, also includes a cap that allows companies to pay no more than a $2 million surcharge, effectively forcing small and medium-size companies to subsidize big business. MITA says that any changes to this plan must start by eliminating this cap and lowering the overall surcharge tax rate in order to level the playing field.
The infrastructure construction industry has dealt with three business tax increases in one year and yet the Legislature has not even attempted to address the transportation-funding crisis. Last week it was announced that the state’s road and bridge program is dropping over $300 million – or 18 percent – this year due to the end of the bonding program. These cuts mean a loss of over 12,255 jobs by 2009, according to a study by the University of Michigan.
"As the politicians in Lansing continue to play political hot potato, family-owned Michigan-based construction companies are getting sick and tired of being the potato that keeps getting tossed around in the process,” Nystrom said. “The Legislature’s hasty action leaves Michigan with yet another half-baked plan. To add insult to injury, the actions taken by the Legislature thus far this year show an extreme contradiction between burdening the infrastructure construction industry with tax increases, yet neglecting to consider investing in Michigan’s economy by increasing transportation funding.”