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Service tax axed! Chamber staff works round the clock to repeal terrible tax.

In the early hours of the morning on October 1st 2007, the Michigan Legislature passed a service tax to balance the 2007-2008 budget. The tax had no committee hearings and was opposed by every business group. The language used was vague and discriminately picked certain businesses over other with no apparent rationale. The next day, Chamber staff went to work on repeal of the tax, and over the next 60 days, was able to put enough pressure on the governor and Legislature to repeal the service tax.

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The story begins when the Detroit Regional Chamber, along with over 50 other business groups, formed the Ax the Tax Coalition and began putting pressure on the Michigan legislature to repeal the tax. The pressure from this coalition and Chamber staff began to have a significant impact on legislative leaders. After a while, the question was no longer whether to repeal it, but how to repeal it, and whether or not the revenue generated was from business, individuals, cuts or some combination of the three.

As the days crept towards the December 1st deadline. the Chamber conducted a thorough analysis of the service tax, which taxes were affected and which were not. The chamber also developed an analysis of exactly what gross initial start up costs would be in trying to comply with the tax, coming to the figure of $14 million a day just to be ready for the December 1st deadline. The Government Relations team began meeting with legislative leaders daily, trying to forge a compromise that would eliminate the tax. The governor and democratic leaders in the legislature demanded that the next proposal be revenue neutral, and senate republicans were clear that there needed to be cuts and a sunset.

The week before December 1st was a hectic one for Chamber staff, as negotiations seemed to break down, time and time again. In the final hours. Chamber lobbyists began the slow arduous process of going between the offices of the senate majority leader, governor and speaker of the house, trying to negotiate a deal.

Forty-four Chamber staffers made 2,100 calls to members who perform the services that were taxed. They encouraged members to call and write their legislators to demand that the tax be repealed. In the end, over 2,600 emails were sent to legislators from Chamber members alone. This incredible grass roots effort led to immense pressure for complete repeal of the service tax.

With a need to generate revenue, a compromise was made that would add a surcharge on all business of 21.99 percent. This option was not the perfect solution, but given the political climate and the need for revenue, it certainly was a better option than the service tax, which could have meant a more than $600 million tax increase on business above what was generated under the SBT.

The collaborative effort of Chamber staff, volunteers and membership truly was a driving force in repealing the dreaded service tax.

Forty-four Chamber staffers made 2,100 calls to members who perform the services that were taxed. They encouraged members to call and write their legislators to demand that the tax be repealed. In the end, over 2,600 emails were went sent to legislators from Chamber members alone. This incredible grass roots effort led to immense pressure for complete repeal of the service tax.

Find out more and sign up at: www.axthetax.com

Dan smith is former director of government relations for the Detroit Regional Chamber.
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Title Annotation:V0TE4BIZ
Author:Smith, Dan
Publication:Detroiter
Geographic Code:1USA
Date:Jan 1, 2008
Words:585
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