Bureaucrats in the MI Department of Treasury have unilaterally decided that the Michigan Business Tax (MBT) materials deduction approved by the Legislature last year does not apply to most construction materials. This, despite claims by key legislators that the deduction was part of the final MBT compromise agreement with MITA and other contractor groups.
Late last year, several members brought to MITA’s attention the rumor that Treasury bureaucrats were not going to allow for concrete, steel, aggregate and other building materials to be deducted from their gross receipts calculation. This was news to MITA, which fought hard to get this specific change in the MBT to help avoid crippling the industry.
For the last several months, MITA has been working behind the scenes with administration officials to force a broader interpretation of the deduction, as intended by the Legislature. Within the last few weeks it became apparent that legislative changes were going to be necessary.
MITA has been working with the Associated General Contractors (AGC), the Associated Builders and Contractors (ABC) and the Michigan Association of Homebuilders (MAHB) to lobby for statutory changes. Sympathetic legislators have indicated a strong support for pushing the legislation. Representative Steve Bieda in the House and Senator Mark Jansen in the Senate are likely to lead the efforts in their respective chambers.
Because of quarterly MBT filings, MITA has urged quick action by the Legislature to address this problem. MITA has also asked legislators to consider adding grandfather clause language to the bill so that contractors are not on the hook for major tax increases on work that was bid prior to the new MBT being put in place.