INCREASE SALES TAX EXEMPTION

FOR CERTAIN FUND-RAISING SALES

House Bill 4115 (committee substitute H-1)

Sponsor:  Rep. Eric Leutheuser

Committee:  Tax Policy

Complete to 2-27-18

SUMMARY:

House Bill 4115 would amend the General Sales Tax Act to provide an increased sales tax exemption for sales made by a school, church, hospital, parent cooperative preschool, or nonprofit organization that has a tax exempt status. The sales are required to be for fund-raising purposes.

Under current law, the sales tax exemption is limited to $5,000 in aggregate retail sales of tangible personal property in a calendar year. HB 4115 would increase the amount to $10,000 per year.

MCL 205.54o

FISCAL IMPACT:

As written, the bill would reduce sales tax revenue by an unknown, but likely relatively small, amount.

For any single organization that is able to utilize the full $5,000 exemption increase, sales tax revenue will decline by $300. Roughly 73% of total sales tax collections are earmarked to the School Aid Fund, and an additional 10% of collections are distributed as constitutional revenue sharing. The bulk of the remainder accrues to the General Fund.

                                                                                        Legislative Analyst:   Patrick Morris

                                                                                                Fiscal Analyst:   Jim Stansell

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.