Small business was well-represented at a Friday afternoon event in Lansing when Gov. Snyder signed the first of a series of bipartisan bills that will provide more stable local government revenue for essential services (including police and fire protection) as the obsolete, job-killing personal property tax (PPT) is phased out.
“We applaud the enactment of this legislation as an important first milestone in the effort to permanently exempt many of our small businesses from this outdated and unfair tax,” said Small Business Association of Michigan President and CEO Rob Fowler.
“It’s been wonderful to work with a governor who is interested in performance and progress in this world of politics,” said SBAM Board Chair Bob Fish of BIGGBY COFFEE, in praising the governor’s leadership in the PPT phase-out. “It’s great for small businesses in Michigan. But the battle’s not done yet, we need to look at (approving the PPT ballot issue) in August.”
(Note: hear Bob Fish and Gov. Snyder speaking at the bill signing ceremony by listening to SBAM’s Business Next show Mon., March 31, on the MichiganBusinessNetwork.com. Listen at 10-11 a.m. EDT (replay at 3 p.m., 8 p.m. and 1 a.m.). Downloadable podcast version available a few days later.)
SBAM Board member Chad Paalman of NuWave Technology Partners was also present at the bill signing.
The personal property tax changes are supported by SBAM and a broad coalition of local government, school and business organizations, and would provide an estimated 100 percent reimbursement to municipalities for lost personal property tax revenue. Currently, a municipality’s personal property tax revenue can be significantly impacted by the loss of an employer. This package offers more financial stability to municipalities as they provide services that enhance the quality of life for all Michiganders. The changes will require voter approval in August.
“The personal property tax served as a disincentive for businesses to locate in Michigan, and discouraged companies already here from purchasing equipment that helps them grow and create more and better jobs,” Snyder said. “It was painful for our small businesses that provide so many of our state’s jobs. That tax needed to be eliminated to make Michigan more competitive and help our state’s economy. At the same time, we want to make sure our communities have a stable flow of revenue to help them provide services such as police and firefighting. The bipartisan package is fair and addresses both of those critical needs.”
The personal property tax harmed manufacturers that rely on expensive tools and equipment and small businesses were hit with compliance costs that often exceeded the amount of taxes they paid. Firms were hesitant to add equipment because each purchase raised their tax obligation.
The proposed reforms allow local governments to have ownership of a portion of the state’s use tax, which is currently levied on a variety of transactions not covered by the sales tax, including vehicle transfers, hotel stays and mail order purchases from retailers in other states. The reforms will not increase the use tax, which cannot exceed 6 percent under the state constitution.
Snyder signed Senate Bill 822, sponsored by Sen. Dave Hildenbrand, R-Lowell, which gives locals title to a share of the state’s use tax in order to provide an estimated 100 percent reimbursement to local governments. The bill also includes ballot language for an Aug. 5, 2014 referendum on the bill.
The governor also signed House Bill 4478, sponsored by state Rep. Andy Schor, D-Lansing, which allows for changes in how ballot language is set before voters.
Additional legislation is expected in the coming month.
In Photo:
At far left, SBAM Board Chair Bob Fish of BIGGBY COFFEE. Fourth from left, SBAM Board Member Chad Paalman, NuWave Technology Partners. Fifth from left, SBAM President and CEO Rob Fowler.