Personal protective equipment and other materials purchased by businesses to comply with safety measures required during the COVID-19 pandemic could be exempt from state taxes under bills pending in the Michigan legislature.
House Bills 6033, 6034 and 6035, sponsored by Reps. Michael Webber, R-Rochester Hills, Jim Lilly, R-Park Township, and Joe Tate, D-Detroit, would collectively include exemptions for PPE and disinfectant products like masks, gloves, hand sanitizer and wipes purchased by employers subject to new COVID-19 safety protocol, and allow employers meeting certain growth and retention targets to claim an income tax credit for PPE purchases.
Changes made to the bills in the House Tax Policy Committee Tuesday would allow for retroactive sales and use tax exemptions on PPE dating back to March 10, the day the COVID-19 state of emergency began, and include a Dec. 31, 2021 sunset on the tax exemption.
Webber told lawmakers the bills account for the added expenses of enhanced workplace cleaning and providing PPE to employees and customers “that many employers didn’t account for when planning their budgets for 2020 and beyond.”
State treasury officials and sales tax beneficiaries like local school districts are concerned the exemptions could mean a big hit to the state’s already depleted revenue levels.
But proponents of the legislation argue any tax dollars generated from PPE sales wouldn’t have happened without the pandemic and would benefit businesses hard hit by COVID-19 closures and increased costs associated with keeping customers safe.
“Reopening sectors of our economy that can do so safely means businesses should not be punished by taxes for simply and courageously doing what is needed to stay open,” said Matt Patton of the Detroit Regional Chamber, one of several business groups backing the concept.
Rachel Richards, director of legislative affairs at the Michigan Department of Treasury, said the department is currently opposed to the legislation in part because of the potentially “significant” revenue impact that could lead to spending cuts for state-funded services down the line.
Richards also expressed concerns with the logistics of retroactively applying tax exemptions on PPE products and compliance with the Streamlined Sales and Use Tax Agreement, but noted the department is open to further discussion.
The bills remain before the House Tax Policy Committee and would need to pass the House and Senate and be signed by Gov. Gretchen Whitmer to become law.
COVID-19 PREVENTION TIPS:
In addition to washing hands regularly and not touching your face, officials recommend practicing social distancing, assuming anyone may be carrying the virus.
Health officials say you should be staying at least 6 feet away from others and working from home, if possible.
Use disinfecting wipes or disinfecting spray cleaners on frequently-touched surfaces in your home (door handles, faucets, countertops) and carry hand sanitizer with you when you go into places like stores.
Michigan Gov. Gretchen Whitmer has also issued executive orders requiring people to wear face coverings over their mouth and nose while in public indoor and crowded outdoor spaces. See an explanation of what that means here.
For more data on COVID-19 in Michigan, visit https://www.mlive.com/coronavirus/data/.
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