On Wednesday November 7th, the Michigan Senate voted 23 to 15 (SB 838) to repeal the Use Tax on Services (PA 93 of 2007).  The new tax is scheduled to start on December 1, 2007.  Late Thursday night, November 8, 2007; the Michigan House of Representatives voted 58 to 48 (HB 5408) to repeal the Use tax on Services and fully replace the lost revenue with a 32.9% surcharge on the Michigan Business Tax. 

It would appear the Use Tax on services is dead.  However, the main stumbling block is how to replace the $614 million expected in the current state fiscal year.  The governor has said she will sign a repeal bill if it was revenue neutral, permanent and bi-partisan.  The House passed bill is revenue neutral and permanent with two Republicans voting for it along with the Democrats.  The Senate version has no replacement and therein lies the problem. 

Representative Andy Dillon, Speaker of the House, said he spoke to Senate Majority Leader Mike Bishop on Thursday.  They agreed to form a joint workgroup to deal with the service tax replacement.  They also agreed to cancel their Thanksgiving recess to complete work on the repeal/replacement before the end of the month.