Proposal reduces sales tax to 5.5 percent and expands it to include services
MARQUETTE -- As the state of Michigan works out a budget for the upcoming fiscal year, it looks like the 168 service industries will be taxed 5.5 percent to bring in more revenue.
Governor Jennifer Granholm proposed the new tax and says it could bring in $500 million for the education budget.
Contractor Jourma Lankinen says a tax on services, like construction in Michigan, is a bad idea because business is already struggling in this economy. That means residents will have to pay more for things like haircuts, attorneys and construction projects.
"They're always looking at trying to get additional money from current business people," said Lankinen, "and you can only tap the system so far. And Michigan is already a challenging place to do business."
Lankinen, who's been building homes for 35 years, says he doesn't think it's fair that he'll have to collect the proposed tax for the state without getting compensated for the extra paperwork. And staff at Swick's Plumbing and Heating in Marquette say their accountants are already busy with nearly 5,000 job accounts a year.
"There's going to be a lot more labor involved on the office staff to process all this paperwork," said part-owner, Rick Gilles.
Contractors say the extra five percent tax might inhibit homeowners from renovating or building because their budgets are already tight.
"People are already on the fence, and that's going to put them into not buying that service from whether it's from my company or any other company," Lankinen said.
While the budget is further along than it has been in years past, several details are still being hammered out in appropriations.
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