June 9, 2006
SBT Tax Incentives Need to be Secured before Summer Recess
LANSING – Governor Jennifer M. Granholm today sent a special message to state lawmakers, calling on them to protect job creation and economic development incentives. Granholm said that lawmakers must act now to protect incentives that are critically important to economic development projects that will result in jobs and investment in the state. The proposal to eliminate the Single Business Tax (SBT) without a replacement is jeopardizing economic development projects currently in the works.
“Businesses considering job creation projects or businesses that have already created jobs, in part, as a result of these incentives, have expressed grave concern regarding the uncertainty surrounding their tax liability,” said Granholm. “Efforts to eliminate the SBT that ignore the negative impact on Michigan’s economic development and job creation efforts are irresponsible and must be corrected.”
Granholm, who supports elimination of the SBT, said the Legislature must take immediate action before the summer recess to protect the state’s economic development tools while the proposed repeal is pending.
“Michigan cannot afford to lose any new development project, whether it’s the redevelopment of the Book Cadillac Hotel in Detroit or a manufacturing project in West Michigan,” she said. “I urge you to act with haste to remedy this pressing problem and protect jobs in Michigan.”
To minimize the negative consequences for Michigan’s economy caused by the proposed repeal of the SBT that ignores incentives already at work, Granholm said lawmakers must:
• Enact a new state law guaranteeing that SBT employment tax credits authorized under an agreement with the Michigan Economic Growth Authority will be preserved under any successor tax enacted to replace the SBT;
• Amend the Michigan Renaissance Zone Act to assure that a business that has committed to a Renaissance Zone location will be exempt from any business tax replacing the SBT to the same extent and duration that the business would have qualified had the SBT remained in effect;
• Amend the provisions of Sections 38g and 39c of the SBT relating to brownfield and historic preservation tax credits to extend the date for receiving a certificate of completion of eligible investment, allowing a taxpayer to claim a credit on a return for the 2007 tax year.
Granholm noted that legislation has already been introduced that attempts to address the brownfield tax credits, which she hopes is a signal that the Legislature will move quickly on this issue.
Granholm wrote that at a minimum, the tools that Michigan uses to compete against other states and countries allow the State to remain a productive partner in key local economic development projects.
“As Michigan fights for jobs today and jobs tomorrow, our economic development team needs every tool at its disposal,” Granholm said. “Advancing this issue will enable the Michigan economy to move forward.”
Granholm’s message comes just a week after an initiative petition seeking to repeal the Single Business Tax Act effective December 31, 2007, was filed with the Department of State. If the Board of State Canvassers determines that the initiative petition submitted includes the signatures of a sufficient number of registered electors, the proposed repeal will be presented to you for enactment without change or amendment. If not enacted within 40 days, the proposed repeal would be submitted to Michigan voters for approval or rejection on November 7, 2006.
While the initiative petition provides for the repeal of the Single Business Tax, no provision is made for replacing the nearly $2 billion in business tax revenue generated annually by the tax to support important services for Michigan families, including education, health care, and public safety.
While Granholm is urging lawmakers to approve a replacement tax before the end of the year, she plans to forward specific recommendations to lawmakers as early as Monday on the more immediate issue related to tax credits and incentives to create jobs; redevelop former industrial and other brownfield sites for productive new use; preserve and restore historic assets for redevelopment; and attract new development and jobs to areas throughout Michigan in need of redevelopment.
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