Warehouse Tax Repealed in Michigan

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

As reported in Logistics Today, the services tax would have affected third-party warehousing and other logistics services. The International Warehouse Logistics Association (IWLA) responded quickly, mobilizing members to contact legislators and hiring a Michigan lobbyist to seek repeal of the tax or an exclusion for warehousing and logistics operations. The IWLA effort claims to have seen 70 legislators in about six weeks.

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

A steering committee formed to address the issue met once or twice a week by conference call with the association's lobbyist and IWLA president Joel Anderson. The committee brought legislators to member facilities to show them how the industry operated.

The IWLA's Legislative Action Center set up a Web site www.nowarehousetax.com which generated about 10,000 letters and e-mails to state legislators.

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

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