ALPENA - The removal of personal property tax for businesses in Michigan was aimed to promote growth for companies within the state, as well as attract entrepreneurs from other parts of the country.
On Thursday, Lt. Gov. Brian Calley made a stop in Alpena for a special Alpena Area Chamber of Commerce event at the Sanctuary Inn to explain how Michigan will benefit from the tax's abolishment and how the state will help to reimburse local government for the loss of revenue.
Calley said Michigan was one of the country's least business-friendly states and other states would exploit that by recruiting business away from Michigan. He said without the personal property tax, Michigan is being viewed differently and as a result more economic development is taking shape and hiring has increased.
News Photo by Steve Schulwitz
Lt. Gov. Brian Calley visited Alpena Thursday to update Alpena Area Chamber of Commerce members and local government officials on how the state and local municipal governments will benefit from the demise of personal property tax.
"It has been no secret that Michigan has lagged behind the rest of the nation over the course of the last decade," Calley said. "Before 2010 we found ourselves at the top of every list you would want to be at the bottom of and the bottom of every list you would want to be at the top of. That is starting to change now. Our unemployment rate has come down, our personal income rate has risen and there has been private sector job growth.We have created more than 200,000 jobs in Michigan in just the last few years and we haven't seen that type of job growth since the 1990s. It is exciting to see."
When it was announced there would be no more personal property tax, cities and counties feared they would suffer large losses of much-needed revenue. Calley said there is a plan in place that will supplement the loss of the tax money. He said money would be used from other state tax sources and distributed to municipalities.
"Explaining what the reimbursement plan is what the purpose of my visit is," Calley said. "There is going to be a phase out of the tax, and there will be the institution of a local government revenue stream from real taxes on the businesses. It will help governments perform better than the personal property tax base."
Calley said many community offer companies tax abatements to entice them to build or expand their businesses. He said the state decided that instead of having abatements being considered on an individual basis, removing the tax would be far more practical and beneficial to developers.
"Local governments tend to reduce their personal property tax as an incentive and most new investment in Michigan come with the abatement. That showed us something was in the way. So instead of doing it company by company, lets just get rid of it, since we have a dependable revenue stream to give to local government to make up for the loss of tax revenue."
Rep. Pete Petallia of the 106th District said in the past local governments would grant abatements to large businesses, but the smaller ones were forced to pay. He said that was unfair and the law to do away with the tax will lesson the burden of smaller companies.
"We want Michigan to be a competitive state to do business in and this tax is a burden to us right now," Petallia said. "We have given tax breaks to businesses to come into our area, but while doing that we put the burden of collecting taxes on the businesses that have been here a long time, doing everything right. we just want to make it a level playing field for all."
Calley said the transition away from personal property tax and toward a state infusion of tax revenue to local governments wouldn't be fully implemented until 2015 or 2016 at the earliest.
Steve Schulwitz can be reached via email at email@example.com or by phone at 358-5689. Follow Steve on Twitter ss_alpenanews. Read his blog, Upon Further Review ... at www.thealpenanews.com.