For immediate release

Contact: Terry Hill, 202-628-8000

WASHINGTON, D.C., Dec. 3 – Michigan Gov. Jennifer Granholm signed her approval of legislation repealing a 6 percent services tax on Dec. 1 sparing franchised small businesses an unwarranted financial burden that would jeopardize jobs—a move lauded by the International Franchise Association and other small-business organizations and advocates.  Spearheading efforts to pressure the legislature to repeal the services tax was the Ax the Tax business coalition, of which IFA is a member.

The tax, put into law only two months earlier, targeted those small businesses in the services industry such as carpet cleaning, janitorial services, landscaping and pack and ship stores.  It was replaced with a nearly 22 percent surcharge on the taxes that businesses will already pay under the new Michigan Business Tax, a tax that most small businesses are not required to pay.  The surcharge takes effect January 1st and will be eliminated in 2017 if certain economic conditions are met. 

The more than 60 members of the coalition include individual taxpayers, businesses, trade associations and chambers of commerce which had committed to putting the question of repeal on the 2008 ballot through a signature gathering process had the agreement not been reached on repealing and replacing the revenue source.  That petition effort was halted upon the governor’s signature.

As the oldest and largest franchising trade group, IFA serves nearly 1,300 franchise systems, 10,000 franchisees and 500 suppliers and works to safeguard the business environment for franchising worldwide.  Today, the industry is responsible for creating more than 18 million jobs and generating $1.53 trillion in activity for the U.S. economy, according to a recent study conducted for the IFA Educational Foundation by PricewaterhouseCoopers. 

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Editor’s Note: The service tax replacement bill is House Bill 5408 and can be accessed at www.legislature.mi.gov.

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