LANSING – Rep. Jeff Farrington, chair of the House Tax Policy Committee, said he expects a vote on the legislation supporters call main street fairness when session resumes, and legislation to clean up the personal property tax changes passed last year has been drafted.

When the committee last tried to report the bills (HB 4202 , HB 4203 ) designed to ensure the collection of the sales or use tax on remote purchases, Democrats planned to abstain. Farrington (R-Utica) said he assumes a vote will occur after the committee begins meeting again following the conclusion of the summer recess.

Although Farrington said he believes some of the Democrats would vote yes on the legislation, Rep. Vicki Barnett (D-Farmington Hills) said there is still some confusion regarding whether the tax collected would be a sales tax or use tax.

Two-thirds of use tax receipts go to schools with the other third to the General Fund. Most of the sales tax goes to the School Aid Fund with smaller portions to the General Fund and local governments via revenue sharing. Barnett prefers the sales tax formula.

Another issue Barnett says she has with a use tax collection is the – what she calls unconstitutional – August 2014 ballot proposal that will ask voters to earmark a portion of use tax revenues to a new authority that will reimburse local governments for some of the revenue they will lose as part of scaling back the personal property tax. That referendum was required as part of personal property tax changes enacted in 2012.

However, Barnett did say the Department of Treasury cleared up many of her other concerns with the legislation, and her stance on the legislation is dependent upon changes made, and how future amendments might clear things up.

“I hope we get his resolved in a way that lets our local main street businesses know that we support them, and they shouldn’t be treated differently than internet sellers,” she said.

Farrington said from his understanding the bills would collect a portion of sales tax and a portion of use tax, but most of it would be sales tax.

Rep. Harold Haugh (D-Roseville), who is on the Tax Policy Committee, said he is open minded about the legislation, but is concerned about which tax would actually be collected.

Rep. Kevin Cotter (R-Mount Pleasant), another committee member, said he is supportive of the legislation. For the bills to be reported from committee without its Democrats, Farrington would need eight of the ten Republicans. However, some have shown hesitation on the issue and look at it as a new tax.

Rep. Patrick Somerville (R-New Boston) said he would like to see the legislation become revenue-neutral, and ideally would like the federal government to pass its own legislation so the state would not have to handle it. The U.S. Senate has passed a bill, which is now in the U.S. House.

He said the House bills would not collect all the tax that isn’t collected now from Internet sellers, it would only collect $10 to $20 million, he said.

Somerville said if the federal government acted and the state was able to collect taxes on all Internet purchases, then the state would be able to lower the sales tax because the base would broaden.

Farrington also said drafts of some clarification bills for the personal property tax changes enacted in late 2012 were sent to various interest groups during the weekend, and that too will be a priority.

“Basically when we sat through workgroups throughout the spring with the Department of Treasury, with people like (the Michigan Municipal League) and the manufacturers and various groups to make sure the legislation worked as it was intended when it was going through,” he said, referring to the Department of Treasury.

Now, he said, some technical changes need to be made to ensure the legislation is working as intended. He also said clerical changes are normal for major legislation after it has gone through the legislative process and is enacted.

The committee also will begin working on legislation to streamline the department’s day-to-day processes, such as timelines to get audits and refund checks released.

“One of the main things we have been doing is work with Treasury … to make sure that function is as clear cut to the taxpayers as possible,” he said.

Farrington also said he would like to look at the state’s tobacco tax around October. “I would like to at least to have a session on it, and see if there is an appetite to review it or not,” he said.

Farrington said he is looking at a revenue-neutral situation. He just wants to look at the fairness of the different tobacco taxes, he said.

For example, Farrington said a small cigar has a wholesale tax, while cigarettes are taxed by the carton. He said it has been six to eight years since the state has altered the tobacco tax, and he simply wants to have a debate during committee time to see if it’s something worth reviewing.

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