LANSING – The ballot proposal requiring a two-thirds legislative majority or affirmative statewide vote to raise taxes would not apply to fees or tax credits, according to an analysis by the nonpartisan House Fiscal Agency.
Some critics of Proposal 12-5 have questioned whether it would apply to increasing or creating new fees, but the HFA analysis said it would not. However, the analysis noted that sometimes it is “difficult to discern whether a particular assessment should be considered a tax or a fee.” It said the new health insurance claims assessment has the characteristics of both a fee and a tax.
So if voters pass the proposal, the courts may play a role in defining what a tax is under the new section of the Constitution, the analysis says.
Additionally, should a future Legislature want to reduce or eliminate a credit in the tax code, it would not need to meet the two-thirds majority requirement, the analysis says. Credits reduce tax liability and are included in the final tax calculation after the tax rate is applied to the tax base, the analysis says.
However, because tax exemptions and deductions do affect the tax base, attempts to reduce or eliminate those provisions would need a two-thirds majority or affirmative statewide vote, according to the analysis.
That would appear to back up Governor Rick Snyder’s contention that the overhaul of the tax code he signed into law last year would have required a two-thirds majority or public vote had the proposal been in effect then.
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