Business leaders watch service tax debate

Service-industry businesses brace for possible new taxes. / Jason Dubois

Local service industry-based businesses are keeping eyes on Lansing, watching what lawmakers do with Governor Jennifer Granholm TMs proposal to reduce the sales tax from 6 percent to 5.5 percent, but expand it to services like hair cuts, tickets to sporting events, and legal services. So far many in that industry do not like what they see.

When you tax services, it gets passed on to other individuals, said Flint Attorney Matthew Norwood. He said the Genesee County Bar Association is against the proposal.

Eventually it will trickle to lawyers. If you don TMt have people who are able to have their own jobs or work in the service industry, they are not going to be able to hire legal representation, he said.

Hair stylists are not fond of the idea either. I think a person might wait a little bit longer to get a service done, said Jamie Arnold, a stylist with Escape Salon and Spa in Genesee County.

State leaders hope to generate about $554 million in the first year of the tax expansion, which would largely pay for education costs. If approved, it would take effect in December. The Legislature has to approve the move as part of Governor Granholm TMs budget in July for it to go into effect.