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Governor's "Loophole" Tax Bills Move Out Of House

April 18, 2007
April 18, 2007.  The House chamber acted on a series of the governor's proposals to close what she called loopholes in the state's tax laws.   Many of the bills were approved on nearly party-line votes. HB 4374 imposes sales tax on prison script used to purchase goods.  HB 4375 and 4376 impose a new commercial rental property tax in place of the general property tax and invalidates the holding of  the WPW case allowing a reduction in the value of property based on vacancy rates.  HB 4385 increases the maximum penalty for failure to file or failure to pay from 25% of tax due to 50% of tax due.  HB 4386 creates a new affiliate nexus standard under which out-of-state companies have nexus with Michigan for all taxes if they share a trademark or business plan with an instate affiliate.  HB 4387 and 4388 imposes income tax on income from oil and gas that was previously exempt under court cases.  HB 4384 imposes personal property tax on water coolers and HB 4383 imposes sales and use tax on 800 lines and WATTS lines including most companies' internal communications lines. These bills would bring in about $10.4 million to the state in new revenues for the current fiscal year, with expectations they will generate more money next year for the state.  The bills now go to the Senate for action.