The debate in Lansing continues on the fiscal year (FY) 2010 budget. And while there are many proposals that would potentially affect Michigan’s food and beverage service industry, MRA would like to provide an update on two in particular: Michigan Business Tax (MBT) reform and expanded sales hours.
MBT SURCHARGE REPEAL / SMALL BUSINESS CREDIT EXPANSION
The MRA strongly supported the Senate proposal. In addition to eliminating the 22 percent surcharge, the legislation also expands eligibility for the MBT small business credit / alternative profits tax rate. The MBT plan was conceptually tied by the Senate Republican leadership to the K-12 school aid funding bill which got final approval by both houses of the Legislature last night. The plan provides additional revenues to soften the per-pupil funding cut in K-12. The original plan would have cut per-pupil funding by $218 from the FY 2009 level. Instead, the House and Senate last night approved a per-pupil funding cut of $165. While the two plans are not formally “tie-barred,” the Senate leadership explained that the MBT plan provides sufficient revenues to reduce the size of the cut the K-12 budget would have been facing.
Here are some details on what the plan includes:
- Phase-out of the 22 percent surcharge over a three-year period, starting in 2010. TOTAL BENEFIT ESTIMATE: $159.6 million in FY 2010
- Expansion of the small business credit, also known as the alternative profits tax. The legislation increases the owner income disqualifier from $162,000 to $182,000 and annually indexes this figure to inflation. The owner income disqualifier is the trigger that trips up most business owners from being able to qualify for this small business-friendly provision. TOTAL BENEFIT ESTIMATE: $5.0 million in FY 2010
These tax provisions are very favorable to the industry.
These proposals are “funded” by the following means:
- Freeze the earned income tax credit at 10 percent for FY 2010 and begin to ratchet up the credit again in 2011 and following years. Provides $160 million in FY 2010
- Enforcing the requirement that those claiming the earned income tax credit live in Michigan. Provides $3.0 million in FY 2010
- Reduce film credit costs by capping producer fees. Provides $50.0 million in FY 2010
- Tax amnesty program. Provides $24.5 million in FY 2010
Language in the proposal which would have reduced several refundable credits to large industrial taxpayers in the state was stricken from the bill in floor debate in the Senate.
The plan’s future in the House of Representatives is uncertain at this time. When Senate Majority Leader Mike Bishop spoke informed House Speaker Andy Dillon of the proposal, Sen. Bishop told us the Speaker’s reaction was favorable at times, unresponsive at others.
The MRA will be working to support the plan in the House.
EXPANDED ALCOHOL SALES HOURS
The Granholm Administration plan to create two new permits to allow Sunday morning and late night alcohol sales was prepped for passage by the House Appropriations Committee. However, because of concerns raised by the MRA, the bill has yet to receive floor consideration. House budget negotiators informed us that the proposal is being considered precisely because it is viewed as a source of new revenues for the state budget.
The plan creates two new permits with a fee of $1,500. It requires local units of government to sign-off on the permits before they are issued by the Michigan Liquor Control Commission. The MRA generally supports expanding the alcohol sales hours, however, we cannot support the proposed fee or the liberal permit granting authority given to cities and townships. The MRA raised these concerns with House budget negotiators. Because of the MRA’s objections, the bill has yet to brought up for a vote. That was considered a likelihood on Wednesday before House leaders pulled the bill from that day’s floor agenda. It was again readied for consideration on Thursday but since our objections had not yet been resolved, the bill was pulled again from the agenda.
It is possible that the bill could come up sometime in the next week.
If anyone has any questions or concerns about any of this, please don’t hesitate to contact Andy Deloney of the MRA at 800.968.9668 or
adeloney@mramail.org.
The Michigan Restaurant Association (MRA) is the recognized leader of Michigan's hospitality industry, providing essential services to the foodservice community. Founded in 1921, the MRA represents more than 4,500 Michigan foodservice establishments. The industry plays an integral role in Michigan's economy, employing more than 423,600 people and creating more than $13.1 billion in annual sales. For more information please call 800-968-9668.
