Lobbyists influence tax on new services

Paul Egan and Mike Wilkinson / The Detroit News

Dating services are covered, but a round of golf is not.

Going skiing will be subject to the state's 6 percent sales tax but not going to see the Detroit Lions.

Consultants' services will be taxed, lawyers' won't be.

Businesses subject to the new tax complained Monday it is arbitrary and unfair. The sales tax on services, which takes effect Dec. 1, was part of a package of bills passed by the Legislature early Monday to resolve a budget impasse and end a brief government shutdown.

"Whoever screamed the loudest was overlooked is what it sounds like to me," said Terry Newman, president of commercial landscaper Superior Scape in Shelby Township.

"Any one service that didn't have a strong lobby was going to get hit with the tax," said Paul Alberts, president of the Romulus-based courier service Reliable Delivery.

Rep. Steve Bieda, D-Warren, chairman of the House tax policy committee, acknowledged lobbying was intense over what services would be subject to the sales tax and what services would not. He did not deny that lobbying played a role in keeping entertainment and tickets to sporting events exempt from the tax.

"I think there was a lot of lobbying against those, and to some extent when this came up people were not too eager to go on that," Bieda said.

But Bieda, who said he did not draw up the list of newly taxed services, said some of the services taxed do have strong lobbyists.

For the most part, the list was drawn up based on the list of "other personal services" in the North American Industry Classification, a system used to track various businesses for statistical purposes, he said.

For weeks, messages about a proposed "ticket tax" were announced at Detroit Tigers games and other events and read during radio game broadcasts. A link to "Fans Against the Ticket Tax" was included on the Detroit Tigers Web site, along with information on how to contact legislators.

"We're pleased it was not included in the list" of newly taxed items, Detroit Tigers vice president of communications Rob Matwick said of tickets to sporting events. "All the teams in the city were opposed to it."

Tom Shields of MRG Inc. in Lansing, lobbyist for Tigers and Red Wings owner Ilitch Holdings, said nearly 6,000 fans signed up for the fight against the ticket tax, an effort that involved the Tigers, Red Wings, The Palace of Auburn Hills, concert promoters and many others.

"This was a grassroots effort" that included a rally at the Capitol Sept. 12, Shields said. He estimated less than $20,000 was spent on the effort.

Senate Majority Leader Mike Bishop, R-Rochester, said he opposed the entire service tax but fought particularly against the ticket tax because he does not consider sports tickets a luxury item and The Palace is in his district.

The tax could be challenged legally for its lack of clarity, Bishop said. "We don't have any idea the extent to which this will be applied to the citizens of the state and businesses of the state."

Not everyone was unhappy about the new taxes.

"I really have no problem with it," said Linda Ward, 26, a graduate student in Georgia who was at the Greyhound station on Monday, where her bus trip home to see her parents in East Tawas will be subject to sales tax starting Dec. 1.

"As long as we can keep the social programs in place, I have no problem with it."

Besides targeting mainstream industries such as consulting and financial planning, the sales tax changes strike the less familiar and the offbeat: Astrologers, psychics, phrenologists and numerologists would have to begin charging their clients an extra 6 percent.

"None of them contacted us," Bieda joked. "They must not have seen it coming."

While it's hard to determine how much those "industries" generate a year, psychic Nina Toro of Dearborn Heights said it's not much. "There is no profit in psychic reading," she said. "If business picked up I'd be more than willing to pay the 6 percent."

Layoffs and foreclosures have hurt her business as well. She typically charges $25 a session, but will drop her price to $10 for the unemployed.

As for the state's future: "I don't see any good."

Detroit News Staff Writer Oralander Brand-Williams contributed to this report.