LANSING – Responding to the business community's concerns over an expansion of the service tax, State Representative Gary McDowell (D-Rudyard) and his House colleagues worked swiftly on Thursday to craft a plan that stops an expansion of the 6-percent service tax from going into effect Dec. 1. Representatives worked closely with Michigan's business community to forge a consensus that will move Michigan's economy forward while protecting funding for vital services such as education, health care, and police and fire protection.
"One of my top priorities as a state representative is promoting economic growth and creating jobs for the hardworking residents of the Upper Peninsula and northern Michigan," McDowell said. "When business leaders – including several individuals from the local downhill skiing industry and tourism bureaus – expressed their concern about the impact of the service tax, I listened. I am pleased that we were able to bring business leaders and lawmakers from both sides of the aisle together to reach a consensus that protects funding for vital services and puts our economy on the road to recovery."
Under the plan, which has garnered vocal support from business leaders across the state, an additional surcharge will be added to the Michigan Business Tax.
The proposed service tax expansion was crafted as a compromise measure in order to get a budget passed by Oct. 1 and stave off a massive state government shutdown. The service tax was one component of a budget for the 2008 fiscal year that includes a mix of cuts, reforms and revenues. The budget implements long-term reforms that will save taxpayers millions of dollars, and cuts totaling nearly $435 million which were made to state departments across the board.
"When my colleagues and I worked with members of the Senate to pass the service tax expansion, our main concern was averting a government shutdown that would have devastated our state," McDowell said. "This plan has support from a broad coalition of business leaders around the state, and it is the right plan to jumpstart our economy and protect the essential services that our residents rely on to keep their communities safe and strong."