LANSING – Responding to the business community's concerns over an expansion of the service tax, House Democrats worked swiftly on Thursday to craft a plan that stops an expansion of the 6-percent service tax from going into effect Dec. 1. Democratic leaders worked closely with Michigan's business community and lawmakers from both parties to forge a consensus that will move Michigan's economy forward while protecting funding for vital services such as education, health care, and police and fire protection.
"When the House joined the Senate in passing the service tax, our focus was on averting a devastating state government shutdown," said State Representative Steve Bieda (D-Warren), who is Chair of the House Tax Policy Committee. "When business leaders expressed their concern about the impact of the service tax, House Democrats listened carefully and acted quickly and decisively. I am pleased that we were able to bring together business leaders and lawmakers from both sides of the aisle to forge a consensus plan that promotes economic growth while protecting funding for vital services. I urge the Senate to act swiftly on this bipartisan compromise in order to save businesses millions in transition costs."
Under the plan, which has garnered vocal support from business leaders across the state, an additional surcharge will be added to the Michigan Business Tax.
"By acting so quickly to the business community's concerns and finding an alternative to the service tax before it went into effect, our plan moves Michigan forward," said State Representative Andy Coulouris (D-Saginaw), who sponsored the consensus plan. "Repealing the service tax promotes economic growth and gets our economy back on track while also protecting funding for vital services such as education, police and fire protection, and road maintenance."
House Democrats felt it was unfortunate that there were House Republicans who refused to repeal the very service tax they voted against just a month ago.
"It is unfortunate that some Republicans continue to obstruct the economic growth of Michigan by engaging in political double-speak," said Majority Floor Leader Steve Tobocman (D-Detroit). "Once again, it was House Democrats that stepped up to the plate and proposed a comprehensive solution that will move Michigan forward."
The proposed service tax expansion was crafted as a compromise measure in order to get a budget passed by Oct. 1 and stave off a massive state government shutdown. The service tax was one component of a budget for the 2008 fiscal year that includes a mix of cuts, reforms and revenues. The budget implements long-term reforms that will save taxpayers millions of dollars, and cuts totaling nearly $435 million which were made to state departments across the board.