Reaction quick to proposed excise tax
The 2 percent excise tax proposed Thursday by Gov. Jennifer Granholm is getting an immediate negative reaction from some service-industry businesses.
"She's punishing the very employers that are growing opportunities," says Jase Bolger, owner of Summit Credit Services in Kalamazoo.
Among the service-sector employers in our region who will be affected -- from barbers and plumbers to auto mechanics and movie-theater operators -- Bolger is well-placed to be heard on the matter.
The Marshall resident has owned his business at 5320 Holiday Terrace, west of U.S. 131 on Stadium Drive, for 10 years. It primarily does customer contact services for large out-of-state banks' operations centers. It has 20 employees here and is conducting interviews to hire two more.
Bolger's type of service-based business is one of a few that are growing in the state's troubled economy, he said, noting that Summit Credit Services expects double-digit growth in sales this year.
Its customers include the Portland, Ore., office of San Francisco-based Wells Fargo & Co. and banking units in Richmond, Va., and Orlando, Fla., that are part of Atlanta-based Sun Trust Bank.
Bolger graduated in 1994 from Western Michigan University with a degree in business administration after majoring in finance and political science. He is a Republican member of the Calhoun County Board of Commissioners.
The excise tax, part of an overall plan by the governor to close an anticipated $818 million state budget deficit in fiscal 2007 and 2008, would represent the single largest tax increase since sales taxes rose from 4 percent to 6 percent in 1993, the Gazette Lansing Bureau reported Thursday. But Bolger said the proposed 2 percent excise tax on services would assess his business triple the amount it paid last year under the Single Business Tax.
"It will be a 2 percent tax on our gross sales," he said.
That would leave him with a choice of trying to pass the cost on to his customers, who could hire other companies in less costly states, or find some way to absorb the increase.
"We will have to look at how we would cut employees, cut wages or lose business," Bolger said. "All of those options will impact individuals."
He said Friday that he is contacting state legislators and talking to the Small Business Association of Michigan to fight the proposal.
"We paid the SBT and expect that we will pay the tax which replaces it. We pay personal-property taxes and real-property taxes. We pay state and federal payroll taxes," Bolger said. "This new proposal is targeting and punishing exactly the type of job creation the governor says she wants to encourage. It's really alarming, however, when you realize we are but one example."
This opinion column is written by Al Jones. He can be reached at 388-8556 or ajones@kalamazoogazette.com.