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Mainstreet Fairness Gets Its Day In The Senate

A Senate committee discussed legislation designed to force more online retailers to collect Michigan's 6% sales tax from its customers.  The "Mainstreet Fairness" proposal put forward by Sen. Jim ANANICH (D-Flint) didn't get a vote in the Senate Economic Development Committee, but Chair Mike KOWALL (R-White Lake) pledged to keep looking into the issue. 

He said Tuesday he would prefer to see how a similar House package "shakes out" in the House before deciding how to proceed in the Senate. 

Wednesday, James HALLAN, president and CEO of the Michigan Retailers Association, took center stage at today's hearing by noting the inequity in requiring bricks-and-mortar businesses to collect a tax that online retailers are showing little effort to collect. 

In the last Holiday shopping season, he said Amazon reported 10 percent growth while Michigan retailers reported a .1 percent average increase over last holiday season, according to the Michigan Retail index. 

While Hallan conceded that retailers were hurt by the ice storm that smacked the state in the days leading up to Christmas, the increase in online sales cannot be ignored. 

"(Retailers) continued to be hurt by badly out-of-date laws that give out-of-state online merchants a price advantage over our Michigan companies that invest in Michigan, employ Michigan workers, pay taxes in Michigan and support their Michigan communities," he said in recent release. 

"Lawmakers cannot let another Christmas go by without enacting Main Street Fairness legislation to enable Michigan businesses to compete on an equal footing with out-of-state 'vapor' retailers and put an end to government picking winners and losers on the retail playing field." 

In order to collect online sales tax from all retailers, federal legislation is needed. Currently, states with a "nexus" or a physical presence in Michigan do need to collect Michigan's sales tax. 

SB 0658 and SB 0659 expand the definition of "nexus" to include subsidiaries that large online retailers like Amazon.com employ throughout the country to perform various tasks. 

The Senate Fiscal Agency estimates that the bill would bring in another $45 million into state coffers, although the concern is Amazon and other retailers will pull their subsidiaries out of Michigan, which could cost the state an estimated 1,500 jobs. 

Amazon did not testify at today's hearing. 

Americans for Prosperity and Tea Party groups also oppose the bills, concerned that the legislation is a sales tax increase. But they, too, did not testify at today's hearing. 

The House moved similar legislation out of the House Tax Policy Committee in September, but movement has stalled on the House floor due to the perception that the bills can be dubbed a backdoor tax increase. 

The Department of Treasury is supporting the House package over the Ananich bills because there's a concern that a provision in an Ananich bill could put the state in a vulnerable position in case of a suit. 

Nonetheless, Ananich said the state needs to act this session in the issue. Congress is not moving quick enough and Michigan retailers continue to find themselves at a competitive disadvantage, he said. 

"We're not going to hold our breath waiting for that to happen," he said. "You take action on a Michigan problem with a Michigan solution. 

"Michigan retailers are suffering. They just want to be treated fairly and equally." 

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