LANSING – The Senate Fiscal Agency was asked to review the state budget to come up with a list of proposed cuts and efficiencies that could help offset revenue losses from the state eliminating the surcharge on the Michigan Business Tax, Senate Finance Committee chair Sen. Nancy Cassis (R-Novi) said Tuesday. Cassis made the comments as the committee reviewed a report by its subcommittee on the MBT.

A spokesperson for Senate Majority Leader Mike Bishop (R-Rochester) confirmed that the SFA had been asked to look into potential cuts to finance eliminating the surcharge, but that the request had been made back in April. There was no comment made on whether the SFA had yet issued that list.

Cassis made the comments as the committee heard a summary of the report the subcommittee drafted after holding four public hearings last month.

The committee voted 4-0-3 to accept the report, with the committee’s three Democrats voting to pass on the document. That caused an annoyed Cassis to snap, “I can’t understand why anyone would pass on this.”

While a number of changes were proposed to the MBT in the report, the one issue that subcommittee chair Sen. Mark Jansen (R-Gaines Twp.) drew the most immediate concern was to eliminate the surcharge.

The surcharge was drafted last fall to replace the sales tax on services that was created to help balance the 2007-08 budget.

But to eliminate the surcharge immediately would cost the state coffers $648 million, and Jansen said it was important for the report to include the “political realities” of changing the MBT.

But because the surcharge is “very, very painful and hard on our businesses” some action should be taken.

Sen. Jud Gilbert (R-Algonac) said that at the hearings it was clear that many businesses were having difficulties calculating accurately what their actual tax liability would be. One company executive said his firm would go from paying nothing under the old Single Business Tax to paying $8,000, but when the subcommittee worked through the calculation process with him he discovered he actually would owe nothing under the tax, Gilbert said.

Sen. Mike Prusi (D-Ishpeming), the lone Democrat on the subcommittee, made the only criticism of the report, saying that while it did reflect the complaints made against the tax, it did not include many of the comments from companies that supported the tax as more fair than the SBT.

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