Legislature Will Make SBT D-O-N-E

June 5, 2006
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GRAND RAPIDS — Stick a fork in it because it’s done.

Grand Valley Metro Council Executive Director Don Stypula said last week that the Single Business Tax is all but history. The tax, which has become the talking point for this year’s elections, could be wiped out by the Legislature by June 15, the day state lawmakers have targeted to head home in order to gear up for the campaign season.

“This is going to happen,” said Stypula of the elimination of the SBT.

Stypula said the final nail in the tax’s coffin was driven by Oakland County Executive L. Brooks Patterson, who ignited a statewide petition drive to place the elimination of the SBT on the November ballot. That drive reportedly has collected 372,000 signatures, many more than the 254,000 that were needed to get the measure before voters.

But lawmakers will act before then.

Fifty-six votes are needed from the House and 20 votes are needed from the Senate to bury the levy for good on Dec. 31, 2007, two years before the SBT’s stated expiration date. Those votes are veto-proof.

So Gov. Jennifer Granholm can’t stop the eradication process from going forward as she did in March, when she rejected that attempt because lawmakers hadn’t included a revenue source in their action to replace the income the state gets from the SBT.

“It’s just short of $2 billion in revenue that could be lost if there is no replacement,” said Stypula.

A special House-Senate committee was created last week to examine potential sources to replace the lost SBT income. But the chances are pretty good that the new tax will not bring as much money into the state coffer as the SBT did.

Patterson has pushed for a levy that is $500,000 less than the SBT, while the Michigan Chamber of Commerce has called for a cut ranging from $400,000 to $500,000. Rep. Jerry Kooiman, R-Grand Rapids, told the Business Journal last month that a new tax could yield as much as $600,000 less than the $1.9 billion the SBT was worth.

Stypula guessed that the leading candidate for a replacement was a tax on gross profits. But he added that the committee was also taking a look at what other states have done in regard to business taxes.

The panel, known as the Special Joint Committee on Economic Growth, is made up of three senators and three representatives. Fulton Sheen, R-Plainwell, and Bill Huizenga, R-Zeeland, are two of the House members on the committee. Senate Majority Leader Ken Sikkema, R-Wyoming, and Sens. Bill Hardiman, R-Kentwood, and Michael Sak, D-Grand Rapids, are not serving on the committee.

Ironically, though, the House unanimously approved a two-bill package just three weeks ago that would offer SBT credits as an incentive to manufacturers and other high-technology companies to locate or expand in Michigan.

“The auto industry is looking for ways to gain traction in the state’s restrictive tax structure. These two bills will bring jobs to Michigan and encourage the Big 3 and other manufacturers to keep investing in the future of our state,” said Huizenga, who sponsored one of the bills and chairs the House Commerce Committee.

Granholm proposed to overhaul the SBT last year, a move that would have included tax breaks for manufacturers. Legislators, however, rejected that plan because it would have raised taxes for other businesses.

When legislators eliminate the SBT, it will mark the second time this year a ballot drive has made them vote on a measure. The effort to get a minimum-wage hike added to the state’s Constitution forced lawmakers to raise the minimum.


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