INCREASE SALES TAX EXEMPTION

FOR CERTAIN FUND-RAISING SALES

House Bill 4115 (proposed H-3 substitute)

Sponsor:  Rep. Eric Leutheuser

Committee:  Tax Policy

Complete to 3-20-18

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.

Currently under the act, the sale of tangible personal property for fund-raising purposes by a tax-exempt school, church, hospital, parent cooperative preschool, or nonprofit organization that has total aggregate retail sales in a calendar year of less than $5,000 is exempt from the sales tax.

Under the bill, the first $10,000 per calendar year in aggregate sales of tangible personal property for fund-raising purposes by a tax-exempt school, church, hospital, parent cooperative preschool, or nonprofit organization that has total aggregate retail sales in a calendar year of less than $25,000 would be exempt from the sales tax.

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 $10,000 exemption, sales tax revenue will decline by $600. 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.