By John Bebow - October 19, 2007
So, if Michigan's "North Coast" natural resources are among the state's very most distinctive competitive assets in the 21st Century, why have we made it more expensive and difficult to take care of that environment?
The arbitrary new state tax on services hits environmental consultants, the folks who design and implement cleanups for Michigan's industrial legacy of thousands of contaminated sites. The services tax on environmental firms doesn't pump tax resources back into the environment. Instead, the new tax just feeds the general maw of government.
"Increasing the costs for environmental compliance and remediation, certainly, will not encourage more environmental protection or effort toward clean-up," argues Kevin Sagasser, an environmental engineer in Gaylord, argues in this special guest column…
Service Tax is bad for Business and the Environment
Michigan’s new 6% tax on arbitrarily selected services specifically targets Environmental Consulting, which will detrimentally affect businesses and decrease environmental protection. Inexplicably, the service tax Bill (#5198) references the broad category of “Consulting Services” with specific focus on NAICS Industry Code 5416, which consists of Management, Environmental and Scientific/Technical consulting. The decision to target environmental consulting for the service tax, represents a complete disregard toward both businesses and environmental protection.
When this tax takes effect in December, the overhead costs for businesses to maintain compliance (long term) with the various regulatory rules for environmental protection will immediately increase 6%. Costs for cleanup of contamination from spill, leaks, etc. will immediately increases 6%, without benefit. The cost for due diligence when deciding on purchasing commercial property will also increase 6%. Increasing the costs for environmental compliance and remediation, certainly, will not encourage more environmental protection or effort toward clean-up.
This is not a luxury service tax, it is a targeted tax on manufacturers, gas stations, industries, insurance companies, and nearly all major job providers, that directly increases the corporation overhead costs. This misguided tax will have a trickle down effect of leaching away environmental protection and compliance. It makes absolutely no sense to increase the costs for environmental stewardship for companies that are often required by law to hire environmental consultants.
This service tax will be a deterrent for environmental assessment and clean-up, and will add 6% to the due diligent and compliance costs for new companies considering Michigan.
Inexplicably, the Service Tax targeted environmental consultants, but excluded many other consultants and many other services.
I am unalterably opposed to this new service tax and urge the Legislature and Governor to initiate/support efforts to rescind/repeal/reconsider the passage of this ill-conceived proposal. This is a major tax increase on industries, investors, working families and job providers and will be very detrimental to our state’s already struggling economy, as well as our environment.
The actions that are taken by our Governor, Legislature and Environmental Interest Groups to correct this obvious error will clearly show their true concerns and views toward actual protection of our environment. I am hopeful that we will see a complete bipartisan consensus on this issue in favor of the environment.
Kevin Sagasser, P.E.
President/Sr. Project Engineer
Sagasser & Associates, Inc.
699 S. Wisconsin Avenue
Gaylord, MI 49735
(989) 732-5800
(989) 732-5825 (fax)
ksagasser@sagasser-associates.com
www.sagasser-associates.com
This is not a luxury service tax, it is a targeted tax on manufacturers, gas stations, industries, insurance companies, and nearly all major job providers, that directly increases the corporation overhead costs. This misguided tax will have a trickle down effect of leaching away environmental protection and compliance.
4 Comments
I'm disappointed at the featuring of this article. I've found comments at The Center for Michigan to provide a compelling case for supporting the tax package passed by the state Legislature, flawed though it assuredly is. It is very inconsistent of this site to promote this solution, and to criticize those calling for recall of those who voted for it, while cherry-picking portions of the new taxes for this type of critique. It is hard to imagine a repeal of any one part of the package without creating a huge, messy free-for-all. As a state, we need to move on. The most helpful thing from the Center would be to provide or link to some type of analysis that would compare Michigan's taxes to those of other states whose success we would like to emulate. Please, try for some consistency in your message.
There are some key distinctions.
We've hosted forums where a BROAD-BASED, LOW-RATE sales tax on services was discussed. The original plan pitched by the governor earlier this year was closer to the mark.
THIS service tax, passed in the pre-dawn hours, without a single public hearing, on an arbitrary and bizarre mix of businesses,at a rate TRIPLE what the governor originally proposed, is not what's been advocated by any economist or expert associated with the Center for Michigan.
The only good thing about the latest tax package is that it brings to an end all of the UNCERTAINTY that has plagued business decision making for the past 18 months. Or, has it? While RECALL efforts persist on the SERVICE TAX portion of the package are we any more certain? While the services affected are being defined, are we any more certain? What services might be added at any time in the future? Actually, our legislators and Governor may have actually INSTITUTIONALIZED UNCERTAINTY!
The only thing CERTAIN is that the SERVICE TAX will make Michigan UNCOMPETITIVE in the fastest growing economic sector as long as it exists. IS THIS THE CERTAINTY WE WANT FOR MICHIGAN?
Is there a place where one can find a reliable list of services NOT taxed? Then I'll look for a rationale….
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