Online Sales Tax Revenue Must Benefit Communities

We’re excited that a recent U.S. Supreme Court’s decision has leveled the playing field for Michigan’s business community taking away the unfair advantage online businesses had over brick and mortar businesses that had invested in our local communities. The ruling requires online businesses to collect sales tax consistent with existing law.

This decision affirms what the Michigan Municipal League and its national partners, including the State and Local Legal Center (SLLC), have advocated for some time. The exclusion of this online sales tax revenue has worsened the disinvestment in local services by the State of Michigan. For background on the U.S. Supreme Court decision go to this previous blog post by SaveMICity here.

The Michigan Department of Treasury announced earlier this week they will begin enforcing the collection of sales tax for online sales and anticipate it is expected to restore $200 million in sales tax revenue for our state.

“We here at SaveMICity and the Michigan Municipal League believe this funding represents a real opportunity to begin making important strategic investments in our communities,” said Dan Gilmartin, League CEO and executive director. “For too long we have neglected and deferred investment in critical services like police and fire protection, parks and other local services in which residents rely. Sales tax revenue represents the second largest source of revenue for Michigan’s communities, and the continued deferment from local programs and services to the state’s budget now tops $8.6 billion.”

While investment in roads is important, even more so is investments in our communities. The state of Michigan ranks dead last – that’s DEAD LAST – in the nation when it comes to supporting our communities.

This disinvestment in our communities has resulted in our local officials limping along trying to do more with less. It’s now to the point that many communities struggle to provide basic services like adequate police, EMS and fire protection, senior programs, trash removal, and snow plowing – all because the state doesn’t properly invest in our communities.

This is hurting our ability to attract and retain talent because we can’t create the kinds of places we all deserve.

A recent EPIC-MRA poll showed overwhelmingly that residents want their tax dollars spent locally. The poll showed 86 percent of residents prefer their taxes be used to provide local services, with only 9 percent saying their taxes should go to Lansing to fund state departments and agencies.

“The demand to fund communities is clear,” said League Board President Catherine Bostick-Tullius, Lapeer city commissioner. ‘Our communities deserve better and this represents a real opportunity for lawmakers to send a message that they understand that without strong communities nothing else, including roads really matter.”

This blog was written by Matt Bach, director of communications, for the Michigan Municipal League. He can be reached at mbach@mml.org.