By By ERIKA PICKLES / Niles Daily Star
NILES – Many may be wondering just what the 6 percent sales tax expansion is going to do, not only to their communities, but their pockets as well.
A partial government shut down took place at 12:01 a.m. Monday, which meant state parks and highway rest stops were closed and lottery ticket sales were put on hold until a decision was made.
The Legislature agreed to raise Michigan's income tax rate from 3.9 percent to 4.35 percent and expand the 6 percent sales tax to include some services.
Now, around 60 general categories of services, from bail bonding services to psychic readers, will be adding taxes to their services.
Others include wedding chapel services, skiing resorts, massages, self-storage units and janitorial services, and that's not even close to the end of the list.
However, a few lucky services, such as golf courses and cable television services, will not be affected.
The increase in the state's income tax means all who pays taxes will see a difference.
State Sen. Ron Jelinek R-Three Oaks, explained the tax increase means that for every $1,000 of taxable income you earn after all eligible exemptions, you will pay $4.50 in taxes. A person earning $30,000 after all exemptions will pay a total tax of $1,305 compared to $1,170 at the old rate, which equals an increase of $135.
The increases may seem drastic to some, but, according to City of Niles Administrator Terry Eull, it's going to help the state and, eventually, the state will see better times.
"None of us likes to see tax hikes, but these rates will help the state to be able to maintain state services and revenue sharing. People need to remember that tax was at 6.5 percent at one time and it went back down. And this isn't permanent. It's set to expire in 2015," Eull said.
For the next eight years, this additional tax money will allow the state-run services continue to function as normal. Police services, which receive some funding from the state, will run as normal, as well as offices like the Secretary of State.
Raising the state's income tax will raise an additional $765 million for the state. The expansion of the 6 percent sales tax is expected to raise $613 million in the 10 months remaining in the budget year after it takes effect on Dec. 1.
"This is something that has been going on for a number of years. Every year when they start talking about the state budgets we just sweat it out. But the good part of this is that it will go away after a while when the state is back in good shape. Unfortunately, right now it's not," Eull added.
Jelinek took time to explain why he voted for the increase and how it will affect Michigan's residents.
He said Senate Republicans began the process by looking for cuts in spending. The House and Senate were looking at a deficit of $1.749 billion.
The Senate Republicans then looked for reforms to spending that would better use present and future dollars.
"We identified and enacted some 18 reforms that will save the state, schools and taxpayers money starting this year or in future years. We expect these savings to become hundreds of millions of dollars in the future," Jelinek said.
"We must have a solution. Without a solution, the state must go into 'no services' and default on all liabilities," he added.
Roxie Pagan, manager at Masters Mini-Warehouse on South 11th Street, said she isn't sure how the state increase will affect her business, if it even will at all.
"As long as they are using the money for what it's supposed to go to, I don't have a problem with it," Pagan said.
She said she has children who are still in school, and with some of the money going toward the school aid fund ($202.6 million) she's all for it.
"Anything I can do to help children in school, not only in this area, but around the state, I will do," she added.
Jamie Stafne, marketing director for Swiss Valley Ski Area near Jones, said the tax increase will unfortunately raise their 2007/2008 ski season prices.
"We encourage skiers to take advantage of the season pass option which is currently available for purchase and unaffected. Our ticket prices have held pretty steady for the past few seasons, but this increase is not our choice," Stafne said.
She added that they are wondering why legislators would choose to tax skiing and not golf.
"We must have more legislators that golf than ski. Ski areas are a large part of the revenue producing recreation business in Michigan. We hope this tax doesn't negatively impact our winter tourism," Stane added.
For some, it's too early to tell whether these businesses and services will be greatly affected by the increase or not. For others, they're staying optimistic and hoping it won't have much affected at all.
New services that will be covered by the 6 percent sales take will include: