IWLA trying to kill inventory tax
The Michigan legislature targets warehousing, but some believe the state may end up hurting itself as well as the industry.
By Tom Andel, Editor in Chief -- Modern Materials Handling, 11/1/2007
Joel Anderson is on a seemingly impossible mission: to kill a tax bill that would raise the cost of adding value to inventory management services in Michigan. Anderson is CEO of the International Warehouse Logistics Association. What makes his mission so difficult is that he only has until Dec. 1.
That's when a 6% tax on warehousing services is scheduled to take effect. It is a usage tax equivalent to a sales tax on warehousing services performed in Michigan. It would affect any company in the state that handles, redistributes or adds value to other companies' goods.
“When Michigan did their analysis of this tax they thought they were catching self-storage warehouses, but instead they used a North American Industrial Classification (NAICS) code that defines warehousing in the broadest sense,” Anderson told Modern. “All of a sudden they picked up an industry 20 times bigger.”
Anderson attended last month's Council of Supply Chain Management Professionals conference in Philadelphia to enlist aid in building a convincing argument against the tax. In addition to networking with fellow attendees in general, he targeted researchers from Michigan State University. He commissioned a Michigan State study he hopes will put his case on a solid intellectual foundation.
“Every industry claims it's over taxed,” Anderson says. “We have to demonstrate to the legislature using a credible source that this was a mistake and that the negative consequences will be greater than the $21 million they hope to balance their budget with.”
Steven Tobocman (D-Detroit), the state representative who sponsored House Bill 5198, told Modern that this was not a mistake and that all warehousing services were, indeed, intended for inclusion. He sees this bill more as the product of partisan politics.
“The readers of your magazine know well the condition of our roads and infrastructure,” he said. “Unfortunately, we needed to come up with the revenue and that requires a bipartisan solution. The senate republicans insisted on a service tax. Until they can help us come up with the replacement revenue, this is what we have to live with.”
Anderson admits his battle against this bill will be tough. Before Dec. 1, IWLA will have to engage a lobbyist to present the Michigan State data to the state legislature and document the negative consequences this tax would have.
Anderson intends to prove not only that Michigan won't get $21 million from the warehousing sector, but it will also lose jobs to neighboring states.
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