Michigan's Services Tax Repealed

LANSING--Michigan GovernorJennifer Granholm signed the repeal and replacement legislation December 1,2007 as the Michigan Services Tax was scheduled to take effect. The tax wasenacted on October 1 as part of an effort to avert a state budget crisis.

As reported inLogistics Today (www.logisticstoday.com), the services tax would have affectedthird-party warehousing and other logistics services. The InternationalWarehouse Logistics Association (IWLA) responded quickly, mobilizing members tocontact legislators and hiring a Michigan lobbyist to seek repeal of the tax oran exclusion for warehousing and logistics operations. The IWLA effort claimsto have seen 70 legislators in about six weeks.

Another facet of theIWLA effort was a 45-page study commissioned through Michigan State University.The study provided information from 40 companies surveyed, helping to quantifythe potential economic effects of the tax on the industry.

A steering committeeformed to address the issue met once or twice a week by conference call withthe association's lobbyist and IWLA president Joel Anderson. The committeebrought legislators to member facilities to show them how the industryoperated.

The IWLA's LegislativeAction Center set up a Web site www.nowarehousetax.com which generated about10,000 letters and e-mails to state legislators.

The service tax will bereplaced with a 21.99% surcharge on the taxes businesses will already pay undera new Michigan Business Tax. That tax and surcharge takes effect January 1,2008. The surcharge will replace the full revenue the service tax would haveraised through the end of the current fiscal year.

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