Williamston Post staff writer
Gov. Rick Snyder has proposed a change to Michigan’s personal property tax law that he believes can cut $1.2 billion in taxes on local businesses. While Gov. Snyder said that change to the personal property tax code could take up to ten years, local governments remain concerned of the potential loss of revenue.
Personal property tax is a tax that businesses pay on equipment purchased for use in their buildings, such as computers or heavy machinery. Gov. Snyder believes that this tax is holding Michigan businesses back and slowing the creation of jobs and lowering competition.
“I believe most people believe the personal property tax is not a good tax system,” said Gov. Snyder in a statement. “It causes a lot of capital misallocations and is not something that’s conducive to job growth.”
House Rep. Mark Meadows, D.-East Lansing introduced “House Bill No. 4103” to the Michigan House of Representatives on Jan. 18, 2011. The bill is an extension of Gov. Snyder’s ideas on personal property tax. HB 4103 provides for the exemption of certain property from certain taxes. Meaning that should HB 4103 pass as is, it would exempt local businesses from paying personal property taxes. After its introduction to the House, HB 4103 was referred to the Committee on Tax Policy for further consideration.
While small businesses may ultimately benefit from the reduction of personal property taxes, local governments still stand to lose revenue from those taxes. Ingham County Treasurer Eric Schertzing believes that major changes to the personal property tax make sense, but that local government needs that revenue replaced.
“In my world you would raise the six percent business tax to cover the shortfall from any repeal and make local units whole based on historic personal property tax collections,” Schertzing said.
Gov. Snyder admits that personal property tax can be difficult to address because there is no true one-size-fits-all fix. Some communities do not rely heavily on personal property tax, so it isn’t a large portion of their tax base.
“Then you’ll find other communities where a personal property tax accounts for more than 50 percent of the revenue, making it the primary revenue source,” Gov. Snyder said.
Each community needs its own property tax law, which is why Gov. Snyder has expressed his desire to take time with this legislation in order to get it right.
Williamston has a large collection of small businesses located downtown and with recent struggles to fill vacant store fronts a reduction in taxes may be beneficial.
The Williamston Chamber of Commerce said in a statement that they believe a reduction in taxes on businesses will be beneficial for downtown Williamston.
“In this economy any way to incentivize businesses to hire more and ultimately spend more is good for the community,” the Williamston Chamber of Commerce statement said. “While the loss of tax revenue to the city would be noticeable, with the businesses being able to spend more, tax free, that revenue would ultimately be returned to the city.”