Small Business Challenges in 2016
No Services Tax To Fund Overspending
Michigan has finally brought spending under control and balanced the budget without gimmicks, however, the tax and spend crowd is always floating a tax on services as a way to raise more revenue so it can resume spending. Recently, the Superintendent of the State Board of Education
made public comments that the sales tax should be expanded to services as a way
to increase funding for education. A services tax was also put on the table in the lame duck session of 2014 as a way to fund roads. In addition to these efforts, the Michigan Department of Treasury seems to always be on a “fishing expedition” for more revenue by reclassifying items that were previously considered services as products so they can now be subject to the sales and use tax. A recent example of this activity is Treasury’s reclassification of previously exempted services involving remotely accessed
software to that of a product and requiring sales and use tax to be paid. Many small businesses that use these services (such as payroll and tax processing) are now required to pay sales and use tax on the service fees.
NFIB defeated attempts to expand the
sales tax to services in 2010, 2011 and during the lame duck session in 2014.
We will be working again in 2016 to keep this bad idea off the table and to seek legislation to reel in Treasury’s efforts to expand the sales tax to services by reclassification of one service at a time.
