No Sales Tax On PPE Under Bills On The Move
March 2, 2021
The now-daily uniform of personal protective equipment (PPE) wouldn’t have the 6% sales and use tax attached to it under legislation that moved out of a House committee Thursday morning.
HB 4224 from Rep. Jim Lilly (R-Park Twp.) and HB 4225 from Rep. Sarah Anthony (D-Lansing) allows for business enterprises to be reimbursed by Treasury for taxes paid while purchasing PPE. To receive a refund, a copy of the establishment’s COVID-19 safety protocol plan must be included.
According to the House Fiscal Agency and “based on national data scaled to Michigan,” the legislation is estimated to decrease sales and use tax revenue by $3 million to $4 million. However, Treasury said $18.5 million would be the lost revenue to the state, schools and local units of government.
“Similar tax breaks are already afforded to those companies purchasing PPE for the purpose of manufacturing,” Lilly said to the committee on Feb. 18. “These bills are aimed at providing some relief to employers who are keeping their employees safe while continuing their business activity — something that’s vital to our economy.”
Lilly said that paying tax on equipment necessary for the safety of Michiganders and the survival of their livelihood should not be a barrier to reopening the state’s economy.
The bills were supported by the Detroit Regional Chamber, the Michigan Manufacturers Association, the Small Business Association of Michigan, the Michigan Chamber of Commerce, the Northern Michigan Chamber Alliance and others.
“It’s simple, it’s common sense but vital for our businesses,” said Matt Patton of the Detroit Regional Chamber on Feb. 18. “I think this is quite simply a certainty for their American dreams.”
Treasury testified on the same day with no position on the bills.
“It is our belief that these bills with the estimated price tag of $18.5 million do belong in a much larger budget conversation about how to best provide for and target the relief for businesses that are struggling the most,” Aaron Keel of Treasury said. “Our data suggests that spending at higher prices due to COVID increased by 80% for PPE since the pandemic.”
Rep. John DaMoose (R-Harbor Springs) said the bills “seemed like the biggest no-brainer I’ve ever heard.”
“I can’t imagine the state of Michigan would look at PPE as a revenue-generating source,” he said.