Government Spending Lobby Has 200 Service Taxes for You

There is lots of talk around the state Capitol these days about expanding Michigan’s six-percent sales tax to include services. Anytime someone wants more of your money, it’s a good idea to ask for the details. Helpfully, one group has detailed hundreds of services on which they think consumers ought to pay higher taxes.

The more-taxes talk comes in two forms. First, there is speculation that a service tax might be used to replace Michigan’s onerous Single Business Tax (SBT), a complex "value added tax" on businesses. The SBT is expensive to administer and difficult to comply with. It creates perverse incentives, and is widely seen as an obstacle to economic growth in this state. There is broad consensus on both sides of the aisle that this tax should be eliminated, and in 2002 this led to a new law that ends the SBT in 2009.

How to replace the revenue the SBT generates is a $1.9 billion question. Expanding the sales tax to include services is one frequently cited idea. Usually the discussions refer to a revenue-neutral replacement tax, meaning that the amount of revenue lost by eliminating the SBT would be replaced on a dollar-for-dollar basis with a service tax. (A Mackinac Center for Public Policy study recommends spending cuts instead of replacing the SBT revenue.)

The other context for service tax proposals is old-fashioned tax-hike talk. Not "revenue neutral replacement of one tax with another," but proposals to take more money from Michigan families and businesses, and give it to state government.

This tax hike talk began a year ago at meetings of the so-called "Red-Cedar Coalition," a group of interest groups that benefit from higher government spending, including the Michigan Education Association and the presidents of Michigan’s public universities. More recently, Ms. Iris Lav, Deputy Director of the Center on Budget and Policy Priorities (CBPP), came to Michigan to lobby for tax increases, including a service tax. CBBP is a pro-big government think tank based in Washington D.C.

While here, Ms. Lav addressed the Michigan League of Human Services, another tax-friendly group whose members benefit from higher government spending. On her visit, Ms. Lav urged our state to adopt a permanent estate tax (death tax), repeal an income tax cut scheduled for July 1, and expand the sales tax to include services. Combined, these proposals represent more than $2.5 billion in tax increases.

A report by Ms. Lav’s organization estimates that Michigan state government could take an additional $2.36 billion from citizens by extending the sales tax to "readily-taxable" services. The report includes a list of such services. "The barriers (to the tax becoming law) are not insurmountable . . . and the benefits from a broader sales tax base outweigh the challenges," CBPP fairly enthuses.

On the question of taxing services to increase government revenue, many economists disagree that there are any "benefits" at all. However, in the interest of letting taxpayers know what the promoters of bigger government have in store for us, here is the list of 200 potentially taxable services recommended by CBPP.

Services purchased by households, or by both households and businesses.

From "Expanding Sales Taxation of Services: Options and Issues" by Michael Mazerov.

Published by the Center on Budget and Policy Priorities, June 19, 2003.

Available at: http://www.cbpp.org/3-24-03sfp.htm

APPENDIX 1 — POTENTIALLY-TAXABLE SERVICES

H = services primarily purchased by households
H/B = services commonly purchased by households and businesses

Lawn and garden-related services
H/B Landscaping and gardening
H/B Lawn care (chemical/fertilizer treatment)
H/B Lawn mowing
H/B Lawn installation (soil prep, seeding, sod)
H/B Tree and shrub care (incl. trimming and removal)
H/B Landscape architect services

Pet-related services
H/B Veterinary services (doctors, hospitals)
H Horse boarding and training
H Kennels
H Pet grooming
H Pet sitting/walking services
H Pet training (incl. classes)

Personal transportation and related services and rentals
H/B Charter bus/limo/plane/boat - short-term rentals and long-term leases (with or without driver/pilot/crew)
H/B Car/truck/van/motorcycle/RV/ATV/trailer — short-term rentals and long-term leases (incl. misc. charges)
H/B Bus/train/limo/subway tickets and fares (local, inter-, and intra-state)
H/B Airline tickets (for info. only; sales taxation barred by federal law)
H/B Taxi fares
H/B Personal chauffeurs services (separate from vehicle rental)
H/B Personal pilots services (separate from plane rental)

Storage and moving services
H/B Auto storage (including fees for long-term garage and parking spaces)
H/B Parking garage fees (short-term)
H/B Personal plane hangaring/parking fees
H Marina services (docking/storage/seasonal removal, etc.)
H Household goods storage (including self-storage fees)
H Fur/clothing storage
H Household goods moving services
H Vehicle transport services (including drive-away)
H/B Delivery/shipping/handling charges (purchased goods)
H/B Packing/crating/shipping charges (outgoing shipping, e.g., gifts)
H Gift wrapping services
H/B Messenger/courier services (personal use)
H/B Private shipping/mailing charges (e.g., FedEx, UPS)
H House/mobile home moving services

Residential utility services
H Electricity
H Natural gas
H Water
H Sewer
H Refuse removal/hauling/dumping

Telecommunications and related services (incl. monthly fees and one-time charges)
H/B Local telephone service
H/B Interstate/international telephone service (including calling plan fees)
H/B Mobile telephone service (incl. monthly fees, airtime charges, roaming charges, long-distance charges)
H/B Paging service
H/B Caller ID, call forwarding, voice mail, 3-way/conference calling, and similar enhanced phone services
H/B Internet access service
H/B Faxing services
H/B DSL/ISDN service
H Prepaid telephone calling cards

Financial and insurance services
H/B Service charges of banking institutions (miscellaneous)
H/B Safe deposit box rental charges
H Bill paying services (fee and commission)
H Investment counseling/financial planning/portfolio management
H/B Mutual fund management fees
H/B Credit and debit card fees (incl. annual membership and usage fees)
H/B Stock brokerage fees/commissions
H/B Insurance services (life, real property, auto, etc.)
H/B Imputed brokerage service value of loans and deposits in depository institutions
H Fees/commissions for check cashing, money orders, travelers checks, money wiring

Personal care services
H Hair care
H Hair removal
H Nail care
H Day spa services (facials, makeovers, etc.)
H Massage services
H Tanning parlors
H Weight loss salons and counseling
H Tattoo and piercing services

Miscellaneous personal services
H Dating services
H Personals advertising
H Miscellaneous advertising for personal purposes (e.g., items for sale, positions wanted)
H Household errand/"personal shopper"/gift consulting/management consulting services
H Child day care services
H Adult day care services
H Baby-sitting services (casual)
H/B Photocopying/printing services
H Taxidermy services
H Custom butchering services
H/B Bodyguard services
H Escort services

Home cleaning and maintenance services
H General house cleaning services
H/B Carpet cleaning services
H/B Window cleaning services
H/B Floor cleaning services
H/B Upholstery/furniture cleaning services
H Swimming pool/hot tub cleaning and maintenance services
H Septic maintenance services
Ductwork cleaning services
H Gutter cleaning services
H/B Snow removal services
H Chimney cleaning services
H/B HVAC maintenance services
H Radon and other home environmental testing services
H/B Pest control services
H Condominium/co-op maintenance fees
H Water softening/conditioning services
H/B Interior decorating and design services
H Home security system consulting, installation, and monitoring
H Closet/storage design consulting services

Clothing-related services
H Diaper service
H Laundry and dry cleaning and pressing services, coin-operated
H Laundry and dry cleaning and pressing services, non-coin-operated
H Shoe repair
H Shoe shining and dyeing
H Alterations, repairs, dyeing, and imprinting of clothing and accessories
H Original tailoring of clothing
H Jewelry repair/cleaning/custom design and fabrication

Education-related services
H Personal instruction (formal classes and one-on-one; see separate list for examples)
H School and university tuition, room and board charges, student fees
H College and private school admission and financial aid counseling
H Test preparation classes
H Private tutoring services
H Private testing services
H Summer camp tuition and fees

Miscellaneous professional services
H Funeral and related services
H/B Accounting/tax preparation
H/B Legal services (wills, estate planning, accident defense, etc.)
H/B Notary services
H/B Private investigator services
H/B Computer consulting/trouble-shooting/data restoration services
H Personal property appraisal services
H Art conservation/restoration services to individuals
H Art/antique collecting advisory and brokerage services
H Commissions on auction purchases/sales (brokerage service)
H Career counseling and resume preparation services
H Debt counseling services
H/B Commercial art, graphic design, calligraphy, printing services (e.g., resume and invitations)
H Personal/professional coaching services

Admissions/amusements/recreation/travel-related services
H Pari-mutuel racing events
H Amusement parks and fairs - admissions, rides, and games
H Admission charges/fees for participant sporting/game facilities (see separate list)
H Coin-operated mechanical amusements (video games, pinball, karaoke, etc.)
H Admissions to school and college sports events (incl. season tickets, "skybox" rentals, etc.)
H Admissions to professional sports events (incl. season tickets, "skybox" rentals, etc.)
H Admissions to movies
H Admissions to cultural events/venues (see separate list)
H Admissions to boat, car, computer, craft, etc. shows
H Lottery tickets
H Other gambling admission and misc. charges
H Health club memberships and fees
H Recreational/scenic transportation (see separate list)
H Memberships (dues, initiation fees, etc.) in sporting clubs and teams (tennis, golf, swimming, baseball, etc.)
H Memberships (dues, initiation fees, etc.) in book and music clubs
H Misc. memberships (dues, initiation fees, etc.) in sororities, neighborhood assns., social clubs, AARP, etc.
H Memberships in buying clubs and coops (e.g., Costco)
H Cable/satellite TV and radio (monthly, pay-per-view, installation, and misc. fees)
H Ticket broker services
H Fees for online gaming, entertain. and info. services and downloadable "digital goods"(see separate list)
H 900 number telephone information and entertainment services
H Services of DJs, musical performers/bands, dancers, other performers for adults
H Services of children’s' performers (clowns, magicians, entertainers, puppeteers, storytellers, etc.)
H Psychic/fortune teller/astrologer services
H Admission fees/cover charges for nightclubs and bars
H/B Services of photographer/videographers (studios and traveling)
H/B Photo finishing
H Media conversion services (e.g., videotape to DVD)
H/B Wedding/party/event planning services
H/B Catering services
H/B Services of private party waiters, bartenders, etc.
H/B Hotel/motel/inn/cabin room rentals
H Complementary meals and hotel rooms at gambling casinos
H Campground and RV park rental charges
H/B Services of travel agents (fees and commissions)
H Services of tour operators (fees and commissions)
H/B Reservation services
H Services of waiters compensated through tips
H Served meals/prepared foods (restaurants, takeout, street vendors, etc.)

Personal property leases and rentals (other than vehicles)
H Musical instruments
H Sporting goods (skis, bicycles, camping equipment, etc.)
H/B Hand and power tools
H/B Gardening tools and equipment
H Tables/chairs/dishes/party-related equipment and appliances
H Dance floors, party tents, "moon bounces," etc.
H Furniture, appliances, home electronics
H/B Computers and peripherals
H Miscellaneous personal property rentals
H Luggage cart rentals at public transit facilities
H Tuxedo/clothing/uniform/costume rentals
H Video tape/DVD/video game rentals
H VCR/DVD/Video game equipment rentals

Misc. repair/installation/fabrication services (other than residences, vehicles, & clothing)
H Furniture and upholstery repair and refinishing
H Appliance repair (kitchen, laundry, vacuum, etc.)
H Home entertainment equipment repair
H Sporting goods repair (e.g., racket re-stringing, bike, gun repair)
H/B Computer repair, hardware upgrading, maintenance
H Camera and video equipment repair
H Musical instrument repair
H Piano tuning
H Sharpening services
H Watch/clock repair
H Picture/artwork framing
H Product assembly/installation services (e.g., furniture, jungle gyms, gas grills, computers, stereo systems)
H Service/extended warranty contracts on personal property
H Custom fabrication services (furniture, cabinets, shelving, window treatments, pillows, sporting goods, etc.)

Medical and related services
H Services of doctors and dentists
H Home nursing services
H Medical testing services
H Psychologist/social work/counseling services
H Optometrists
H Nutritionists/dieticians
H Occupational/physical/massage/speech therapy
H Alternative medicine practitioners (e.g., acupuncture, chiropractors)
H Hospital services
H Nursing home services
H Specialized facilities (substance abuse, hospice, dialysis, etc.)
H Nursing home/elder care consultants
H Rent/fees for assisted living facilities
H Rental of medical equipment for home use

Vehicle repair and maintenance services
H/B Auto/motorcycle/RV/ATV repair and maintenance services (engine, transmission, body, tire, etc.)
H/B Boat repair and maintenance services
H/B Airplane repair and maintenance services
H/B Auto/boat/plane cleaning and waxing services
H/B Auto washing and waxing (coin op)
H/B Auto and boat road service, towing, and removal and disposal of wrecked vehicles
H/B Auto/boat/plane rustproofing, painting, other exterior maintenance and customization
H Car audio installation and repair
H/B Auto locksmith services

Residential construction/renovation/repair services
H Locksmith services
H Architectural services
H Consulting engineer services
H Gross charges of a general contractor for labor or for total job
H Skilled trades services (original construction, renovation, and repair; see separate list)
H Basement waterproofing services
H Floor refinishing
H Site excavation and grading
H Well drilling and maintenance
H Rental of construction equipment

Housing and real estate-related services
H Real estate agent fees/commissions (buyers' and sellers' agents)
H Real estate title search services
H Real estate appraisal services
H Real estate surveying services
H Real estate inspection services
H Real estate advertising
H Escrow agent services
H Apartment search and roommate matching services
H Loan "points", lock-in fees, other loan-origination fees
H Residential rentals
H Trailer park site rentals

Examples of personal instruction (formal classes and one-on-one)
Musical instruments/voice
Dance
Yoga, aerobics, etc.
Personal trainers
Ceramics/painting/sculpture/crafts
Cooking
Woodworking
Auto repair
Driving
Sailing
Flying
Sports (e.g., golf, tennis, fencing, martial arts)
Computer and computer software use
Misc. adult-education-type courses (investing, retirement planning, public speaking, travel, etc.)

Examples of cultural events/venues for which admission might be charged
Theater, music, dance, ice show, circus, etc. performances
Museums (public and private)
Historic houses and gardens
Natural sites and parks
Guided tours/walks

Examples of participant sports/game facilities/services for which admission fees may be charged
Golf (courses, driving ranges, miniature)
Batting cages
Climbing walls
Skating rinks
Shooting ranges
Horse stables/pony rides
River rafting
Tennis courts
Squash and racquetball courts
Bungee-jumping
Ski lifts
Swimming pools
Sky diving
Parasailing
Fishing charter boats
Services of hunting/fishing/climbing guides
Bowling alleys
Billiards parlors
Laser tag
Paintball
Go-carts

Examples of recreational/sight-seeing transportation
Train rides
Boat rides
Chair lifts/gondolas
Bus/limo/van/jeep rides
Dinner cruises
Helicopter, balloon, plane, glider rides

Examples of online entertainment and information services
Online gaming services
Online music access services
Downloadable music and video
Adult content sites
Gambling sites
Online newspaper and magazine subscriptions and archives
Online databases and information (financial, current stock prices, genealogy, etc.)
Downloadable software
Downloadable articles (pay-per-view)

Examples of skilled residential construction/renovation/repair services
Carpentry
Painting/staining/deck treatment, etc.
Wallpapering
Plumbing
Drywall/plaster
Masonry/cement/stucco/driveway
Roofing
Electrical
Heating and air conditioning
Flooring installation
Custom cabinetry making/installation
Swimming pool
Fencing
Tile/marble/countertops

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Jack McHugh is a legislative analyst for the Mackinac Center for Public Policy, a nonprofit research and educational institute, and manager of the award-winning MichiganVotes.org Website that monitors legislative action.