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New law to enforce an Internet sales tax in Michigan clears House committee

Harold Haugh

Legislation to enforce a 6% sales tax on internet purchases has cleared a state House committee. 

Supporters say Michigan businesses have a competitive disadvantage against large online retailers like Amazon, which don’t have to collect sales tax.

Any business with a physical presence in Michigan is required to collect sales tax on internet sales. This would expand the definition of “physical presence” to include things like warehouses and distribution centers – not just retail stores.

Rep. Harold Haugh (D-Roseville) and many other Democrats like the measure. Haugh says it could raise up to $30 million a year for schools and local governments.

“Some people scoff at that,” said Haugh Wednesday afternoon. “I don’t. I think that’s a large sum of money. Any of that type of money that can get to the local municipalities and the schools, I want it to happen.”

But some lawmakers, Republicans and Democrats alike, are not as excited because they say it’s really up to the federal government to address the issue.

Rep. Jeff Farrington (R-Utica) chairs the committee that approved the legislation Wednesday. He abstained from voting on the bill.

Farrington says it may be a step in the right direction.

“To me, I try to look at, what’s the best overall policy? And that’s the one that’s at the federal level. And I would urge Congress to move on it,” he explained after the hearing.

A federal version of the legislation stalled in Washington earlier this year.

State House Speaker Jase Bolger (R-Marshall) says he’s “frustrated” that Congress has not acted.

“Once again, the federal government’s not doing its job, so we’re left to pick up their slack,” said Bolger. “But you’re hearing, also, concern about what’s the best policy and will we achieve the goal of equity and fairness and respect for taxpayers?”

Bolger has not committed to taking a vote on the issue in the House.

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