Friday, July 14, 2000
SBT Phase-out to Benefit Families, Consumers & Job ProvidersAt a small business in Southfield, Governor John Engler today signed a package of bills that will phase-out Michigan’s Single Business Tax – his 26th tax cut since taking office in 1991."It’s been said that the only way to reform the SBT is to abolish the SBT," said Governor Engler. "Today, we are taking that good advice. As a result, Michigan families, consumers and job providers will all benefit as the single biggest impediment to even more job growth – the Single Business Tax -- is removed entirely," said Governor Engler."One of the hallmarks of my administration has been to create a competitive tax environment," Engler added. "With this tax phase-out, we will make Michigan more competitive and attract thousands of new, high-paying jobs to Michigan instead of other states or countries."Engler emphasized that eliminating the SBT is good news both for Michigan job providers and for Michigan consumers. "As we all know, when the cost of doing business is higher than it should be, it’s the consumer who ends up paying the bill," he noted.The Governor signed three bills at Vettestorations, the Southfield-based restorer of vintage Corvettes with seven employees.HB 4745, sponsored by Rep. Nancy Cassis (R - Novi), gradually phases-out the Single Business Tax by 0.1 percent each year (retroactive to Jan. 1 this year) until it is completely phased-out in 23 years. The bill also:
- Defines when a foreign corporation is subject to the SBT by calculating the amount of business conducted in Michigan.
- Phases out the Capital Acquisition Deduction after this year and implements a new Investment Tax Credit based on the sum of fixed and mobile tangible asset less any sales of those assets or transfer of those assets out of state.
- Provides relief to major companies which restructure and "spin off" portions of their business.
House Bill 4744, sponsored by State Representative Cassis, and Senate Bill 544, sponsored by State Senator Mike Rogers (R –Brighton), amend the General Sales Tax Act and Use Tax Act.These bills:
- Codify current practice for apportioning sales and use tax exemptions other than for telecommunications equipment. Effective March 31, 1995, property or services that are exempt under the Acts would be exempt only to the extent that the property or services are used for exempt purposes. Beginning April 1 this year, telecommunications equipment use tax exemption would be apportioned using a formula, which presumes 90 percent exempt use.
- Expand the industrial processing sales and use tax exemptions effective April 1 this year.
- Expand the exemption for research and experimental industrial processing activities by extending the exemption to third-party servicers and extending the exemption to activities undertaken to satisfy governmental regulations or to receive governmental approval.
- Codify the current sales and use tax extractive operation exemptions.
- Defines uncollectable debts by relying on the Internal Revenue Code. It treats bad debt the same for both sales tax and use tax.
- Amends the General Sales Tax to provide a full exemption for rolling stock purchased, rented or leased by an interstate motor carrier for use in interstate commerce. SB 544, in conjunction with HB 4586, treats in-state and out-of-state purchases the same by providing both with a complete exemption.
- Exempts from the sales and use tax property used in the construction, alteration, repair or improvement of a nonprofit hospital for taxes levied after Dec. 31, 1990 and before July 1, 1999.
- Allows the Revenue Commissioner to authorize the obligation of self-accruing and remitting use tax due on purchases or leases directly to the Department of Treasury under a Direct Payment Authorization.
"This tax phase-out is another important step to the long-term strength of Michigan’s economy," Governor Engler added. "By phasing out the SBT, we are removing the last significant business barrier and positioning Michigan for an even brighter future."