A bitter, intra-party battle over Michigan’s participation in the multi-state Streamlined Sales Tax Project is developing, pitting members of the Republican controlled State House of Representatives against Republican Governor John Engler.
Engler has been pressing House members to follow the State Senate’s lead by approving a bill authorizing the state’s participation in the project to streamline state sales and use taxes on mail order, Internet and telephone sales as well as other direct response means into one single rate.
So far 13 states have passed legislation to participate in the project. More than a dozen other states are considering similar action as congress considers more than half a dozen bills to extend the current federal moratorium on new Internet-related taxes by at least five more years. The current moratorium is scheduled to end on Oct. 21.
If 25 states decide to adopt such legislation Congress may consider national legislation to require direct marketing companies to collect taxes in their respective states, said Frank Julian, tax counsel for Federated Department Stores and the Direct Marketing Association.
The Michigan Senate approved the tax project participation measure 28-8 with two abstentions before sending it to the House for consideration.
Key members of the House Tax Policy Committee oppose the measure. Committee member Robert Gosselin (R-Troy), said yesterday that panel members “estimate that Michigan taxpayers would pay out another $3.9 billion [in sales and use taxes] over the next 10 years” if the bill is approved which, he feared could lead to a national sales tax.
“And this comes from a governor who passed 31 tax cuts in 10 years who now suddenly wants to start taxing and spending,” Gosselin said.
The Detroit News quoted Emmons as attributing the committee’s problems to plans by some of its members to seek election to the state Senate this fall.
At deadline, the bill was still being debated in the Committee.
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