Michigan Single Business Tax Bill Passes State Legislature

December 6, 2000

The Michigan House of Representatives last night passed a bill, introduced earlier this year by Michigan Senator, Bill Schuette, that will reduce a Canadian carrier’s Michigan Single Business Tax (MSBT) liability by at least two-thirds.

The bill passed by a vote of 88 to 14. A year ago, very few people in the know gave the Canadian trucking industry any chance of success in its battle to obtain changes to make the Michigan Single Business Tax — a tax that is inconsistent with international tax norms and NAFTA — more palatable.

“Passage of the legislation, which will isolate strictly Michigan business revenues for tax purposes and give Canadian truckers a break on the amount of driver wages that must be included for tax purposes is a major victory for the Canadian industry and for Canada-US trade,” says David Bradley, who is chief of both the national trucking group, Canadian Trucking Alliance (CTA) and the Ontario Trucking Association (OTA).

A combined effort of the OTA, the Quebec Trucking Association, CTA, the federal and Ontario governments, and a top notch team of local lobbyists, lawyers and tax specialists, has not only proven the naysayers wrong - it may very well have written the playbook on how Canadian industry and government can work together to mount an effective lobby on behalf of Canadian interests in the US states.

Passage in the House came the same day Bradley and CTA/OTA manager of policy development, Steve Laskowski were dispatched to the state capital to quell a last minute bid by the Teamsters (through the AFL-CIO) to kill the bill. An emotional backlash against Ontario trucks by groups opposed to the shipping of Toronto’s trash to Michigan, which has nothing to with the MSBT, but a lot to do with international politics, had also created concern.

Yesterday, Bradley appeared before the House of Representatives’ Tax Committee to push for passage of the bill. Then he and Canadian Consulate officials met with the Speaker of the State Legislature, Charles Perricone, to ensure the bill would be dealt with before the Legislature (which has been sitting in a short “lame duck” session) rose for the Christmas recess. The bill was passed by the Michigan Senate last week.

“Canada and the US enjoy the world’s largest trading partnership. The world’s second largest trading partnership is that of Michigan and Ontario. 50% of Michigan’s exports are to Ontario and 80% of trade between those two jurisdictions alone is shipped by truck. It was in everyone’s best interests to reach an agreement.”

Bradley acknowledges that is was a true team effort that eventually allowed the Canadians to prevail. “We had terrific support every step of the way from several departments and ministries in Ottawa and Queen’s Park. The people at the Canadian Consulate in Detroit were fantastic. And, our legal/lobbying experts from Dykema Gossett in Detroit and Lansing, along with the tax experts in the Toronto and Detroit offices of Deloitte & Touche, were all outstanding.”

“We are also grateful to Michigan Senator Schuette and speaker Perricone, chair of the Senate tax committee, Joanne G. Emmons and House tax committee chair, Nancy Cassis, their staffs and countless others for their time, understanding and true desire to resolve this important trade issue amicably and fairly.”

“We also had great support from the Michigan Trucking Association and a number of Michigan businesses and associations, which was invaluable.”

A formal announcement of the resolution of the Michigan tax issue is expected to be made this Friday in Windsor, ON, when the Canadian and Ontario governments host about 500 US politicians and political staff at a special dinner for the Council of State Governments.

The only remaining step in the process is for the Governor of Michigan, George Engler, to sign the bill into law. But, that is a slam-dunk. Under Michigan law, even if the Governor does not sign the bill, it has the force of law. While the Governor has the right of veto, his office has indicated his support for the bill. The signing is expected to occur over the next two weeks.

The “Michigan model” will now be employed to try and bring about constructive change in other states, such as Pennsylvania.