Proposed Service Tax Draws Fire

It’s certainly no secret that Michigan has a huge budgetary hole to climb out of.

Governor Jennifer Granholm has proposed a possible way out.

It would be an overhaul of Michigan’s tax system.

The Michigan Business Tax would be eliminated by 2012 — cut in half this fall and then phased out entirely next year.

The state sales tax would be cut from 6% to 5.5%.

But many kinds of service businesses, like auto repair shops, would have to charge sales tax on their services.

Tom Auston owns the Marquette Midas store.

He doesn’t think it’s fair to his customers to have to charge sales tax on the labor they do at his shop, since they already have to charge it on the parts they order and use.

Most services that aren’t already covered by sales tax would be affected.

There are some exceptions, though — health care, education, new construction and remodeling, to name a few.

A motel owner thinks it could affect her customers if it’s extended to auto rentals.

Lyn Durant of the Cedar Motor Inn feels it’s basically a transfer of the tax burden from one person’s pocket to another’s.

She feels cutting government spending at all levels — local, state and federal — has to take precedence over any new tax.

There’s a lot of opposition to the idea in Lansing, too.

Democratic House Majority Leader Andy Dillon has said any tax increase should be a last resort.

Republican Senate Majority Leader Mike Bishop adamantly opposes any increase.

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