That was the question I presented to John Lindley, Government Relations & Regulatory Affairs Director with the Michigan Association of Certified Public Accountants (MACPA).  He is the inside lobbyist with the MACPA who works closely with Tom Hoisington of Public Affairs Associates, the outside multi-client lobbyist for the MACPA.  It's their job to know what's happening in Lansing.

The answer:  We don't know. 

The legislature is surrounded with uncertainty on what to do with the Use Tax on Services.  The overwhelming consensus of the business community is to repeal the tax.  However, the money expected to be raised by the new tax is already being spent as part of the current year approved budget.  It must be replaced.

The governor has stated that any repeal of the tax on services must be accompanied with a 100% permanent replacement of the revenue.  The Senate has repealed the tax with no replacement (SB 838).  The House has repealed the tax with a 100% permanent replacement of the revenue with a 32.9% surcharge on the Michigan Business Tax (MBT) (HB 5408). 

Both the House and Senate have stated a desire to work out the differences on replacement for the tax and they both see the MBT as the most logical source of the replacement revenue.  They have set up a working group to work on the problem.  The legislature plans to meet tomorrow, next week Tuesday and three days at the end of the month.

There are two unlikely sources that might keep the tax with some changes.  Tricia Kinley of the Michigan State Chamber of Commerce said her group opposes the MBT surcharge as written, arguing it should be temporary with a specific sunset in place and the revenue generated only limited to the business-to-business portion of the service tax.  Robert Klein, Michigan State Treasurer, favors keeping the Use Tax on Services with some tweaking.  He said at the Michigan Tax Conference last week, that he favors the taxation of services because it is fair, stable, neutral and easy to administer.  He further stated that a tax on service would reduce the need for future tax increases.

What does this all mean?  The Use Tax on Services may be repealed but not until the end of the month.