LANSING – Preventing the state sales tax from being applied to services is a high SBAM priority and one where SBAM has truly made a difference in the fight. SBAM?s strength is our educated grassroots membership working with our professional lobbying team to positively impact government regulations and laws. SBAM opposes government bureaucrats and legislators who think economic development is about taxing small business in order to grow more government programs. The state sales tax is not applied to services in Michigan thanks to the efforts of SBAM and our army of grassroots members.

In 2004, Gov. Granholm advocated applying the sales tax to so-called ?rich people? services. It was obviously an attempt by government to get the foot in the door to begin taxing all services. Taxing “rich people” services today leads to taxing all services tomorrow. It?s not just Democrats advocating the taxing of services. Former Republican Speaker Rick Johnson commented last year in a forum for the Michigan Association of Counties that we may need to look at expanding the sales tax to some services.

In 1994, when the Michigan Department of Treasury started taxing the service that a small business provides in making prototypes for manufacturing, SBAM was there to put a stop to it. In the late 80s and 90s, the Michigan Department of Treasury tried to circumvent the legislature by adopting rules that would apply sales tax to advertising. SBAM took aggressive action in the legislature to prevent the rules from being applied. We helped organize and support Michigan advertising firms as they took the case to the Michigan Tax Tribunal. In large part, SBAM?s efforts prevented advertising from being taxed in Michigan.

Michigan policy makers are currently debating tax reform and we expect a resolution to occur in the next few weeks. We anticipate small business tax relief to be a part of this proposal. It will include reduced Single Business and Personal Property taxes. Reducing the tax burden is nice but SBAM?s goal is to eliminate the Single Business and Personal Property tax in Michigan. Our ultimate goal is to eliminate all business taxation.

In a very real sense, businesses don?t pay taxes. The cost of taxes is simply passed on to consumers, because business taxes are embedded in the price of goods and services. For that reason, SBAM believes that businesses should not be taxed at all. Although this philosophical position has strong support by SBAM and among the small business community, it?s not yet politically realistic.

SBAM?s professional lobby team and army of grassroots advocates work diligently to set policy and initiate government reforms that recognize reality and what is doable in the existing political environment in Lansing and Washington, D.C. As Michigan continues to see our manufacturing industry decline, we anticipate that policy makers will increasingly look to tax services to replace lost tax revenue. The sales tax on services fight is not going to go away anytime soon.

This column was written by SBAM Vice President Government Relations Barry Cargill