Today is Friday and the Use Tax on Services is still alive.  This was supposed to be the week that the tax was repealed.

Following is what transpired this week:

TUESDAY:  The House and Senate reconvene after the Thanksgiving holiday.

WEDNESDAY:  The Senate sent the House their final offer:  Repeal the Use Tax on Services and replace it with 19% surcharge on the Michigan Business Tax (MBT) with a $4.75 Million cap to sunset on January 1, 2012.  Late Wednesday night the House passed their final offer:  Repeal the Use Tax on Services and replace it with a permanent 25.7% surcharge on the MBT with a $4.75 Million cap.  The House then adjourned until next week Tuesday giving the Senate their take-it or leave-it offer.

THURSDAY:  Nothing happened legislatively as the politicians went to the media blaming each other for the problem.

THE PROBLEM:    The only differences between the two repeal bills are the amount of the replacement revenue and whether the MBT surcharge is permanent.  The governor has stated that she would only sign repeal legislation if all the revenue was replaced, it was permanent and bi-partisan. The House version fits the governor's criteria.  However, Senate version does not replace all the revenue and it has a sunset date.  Meanwhile the state is spending the money in the current fiscal year which the Use Tax on Services was intended to raise.

FRIDAY:  Capital sources have learned that House Speaker Andy Dillon met with business leaders Friday morning and Senate Majority Leader Mike Bishop asked Governor Jennifer Granholm on Friday to ask the Department of Treasury (Treasury) to suspend the implementation of the use tax expansion to services before it goes into effect midnight Saturday.

In the mad scramble to find a way to stop the 6% Michigan Use Tax on Services from being spread to a variety of allegedly non-essential services in roughly 12 hours, lawmakers and the executive office are exploring several possibilities including the House reversing course and calling a special session for 6:00 PM Friday evening.

The Department of Treasury must implement the new Use Tax on Services at midnight Saturday unless the governor signs a repeal order.  Treasury has been working for the last two months on implementation of the tax.  They have created a web site and other resources.

Please stay tuned as this story is not over.