New laws affect taxes
LANSING, Mich. – Gov. Rick Snyder recently signed several tax and regulatory reforms into law, affecting many cities and counties.
Bills signed by the governor:
Personal Property Tax: The new laws address this obsolete, burdensome tax by eliminating the tax on small taxpayers and phasing it out on manufacturing personal property while protecting local units of government that rely on the PPT. Manufacturers are particularly harmed by the PPT because they rely on expensive tools and equipment, which are subject to PPT, for their operations. Large manufacturers were one of the few groups that did not receive tax relief under the new Corporate Income Tax.
Under the laws, a phase-out of the tax on manufacturing personal property begins in 2016 and all manufacturing personal property will be exempt starting in 2023. Small taxpayers will be exempt from the tax starting in 2014. The changes recognize the vital role that strong communities and schools play in Michigan’s future by providing reimbursement rates to local units of 100 percent for police, fire, jail and ambulance revenue losses and a minimum of 80 percent to reliant local units for everything else. It also holds schools harmless and fully covers school debt.
A portion of the state use tax currently going to the General fund will be dedicated to reimburse impacted local units. The use tax will continue to be capped at 6 percent. The change in the Use Tax will be “revenue neutral” and will not increase total state and local taxes levied in Michigan. The levy will require statewide voter approval in August 2014 before taking effect.
Severance Tax: This six-bill package includes a 2.75 percent severance tax on the gross mineral value of specified nonferrous metallic minerals, such as copper and nickel. The severance tax replaces the existing array of taxes with a structure that is more simple, fair and efficient. For mines that previously paid property tax on the ore body, a property tax credit will be provided against the severance tax once the mine begins production. The credit will not impact local revenues.
The severance tax will be collected by local units of government with 65 percent of the revenue retained by impacted counties, townships, school districts, intermediate school districts and the School Aid Fund. The remaining 35 percent will go into a rural development fund to support long-term economic development opportunities.
Regulatory Reform: These changes bring needed updates to the state’s workplace safety regulations to help make Michigan more inviting to job providers while still ensuring appropriate safety protections.
SB 1335, ensures that Michigan workplace safety rules will exceed federal standards only when there are circumstances unique to Michigan that require going beyond federal standards, or when a broad consensus of union and non-union employers and employees agree that a standard is necessary.
HB 5922, reduces a needless layer of government by eliminating the General Industry Safety Standards Commission.
Visit www.legislature. mi.gov for more information on the bills.