Amazon, eBay, Walmart, and other major online retailers must collect Michigan sales tax from third-party retailers who sell goods and services off their websites to Michigan customers, under a four bill package that moved out of the House Tax Policy Committee Wednesday morning.

The expansion of Michigan’s online sales tax law to include Mike’s Sporting Goods, RareFinds or anyone else selling under a major retailer’s banner is expected to draw between $80 to $120 million more into the state, a change that has the support of the Michigan Retailers Association (MRA), Amazon, Walmart, the Department of Treasury and local governments.

Wednesday’s vote marks the first time legislation requiring every sale on a common marketplace that takes place in Michigan be subject to state sales and use taxes has moved out of a Michigan legislative committee.

“Retailers are thrilled that the committee reported legislation to provide equal treatment to all sales,” said MRA spokesperson Amy Drumm. “We commend all the work done by the sponsors and committee to develop truly good policy.”

Last year’s U.S. Supreme Court decision in South Dakota v. Wayfair allows states to tax major online retailers. The Michigan Department of Treasury has been operating on internal rules that is allowing it to collect sales tax from online retailers who make more than $100,000 in sales to Michigan residents or had 200 or more transactions from Michigan customers.

Michigan is expecting to bring in $168 million this fiscal year and $225 million next fiscal year due to this change, according to the House Fiscal Agency, and Tax Policy Committee Chair Lynn Afendoulis (R-Grand Rapids Twp.) said she feels it important that these rules be put into statute.

AT&T, Sprint, Comcast and other telecommunications providers are opposed to HB 4540, HB 4541, HB 4542 and HB 4543 until they’re able to get a specially tailored exemption. 

They’re not opposed to Walmart or Amazon collecting state sales tax off any of their products they happen to sell. They just don’t want online retailers put in a position to collect information that the telecommunications companies currently collect so they can capture local, 9-1-1 and other taxes every month.

By surrendering customer data collection to another entity, the telecoms are concerned they’ll be on the hook to pay the taxes of a customer whose information was collected incorrectly and can’t be tracked down.

Afendoulis said she’s aware of the concerns and said she “hopes to be part of the solution.” Drumm said in her comment that the retailers don’t want “true tax fairness” to be “eroded by adding exemptions for the hypothetical sale of future products or services on marketplaces.”

The bills advanced to the House Ways & Means Committee on a 13-1 vote based, at least in part, on a fairness argument made by brick-and-mortar retailers. Afendoulis’ committee took testimony last month from shop owners who claim customers try out products in their stores only to buy the same product online to avoid paying state sales taxes.

Rep. Matt Hall (R-Emmett Twp.) cast the lone no vote on moving the bills. He said he wished the committee could have addressed the telecommunications industry’s concerns first. Also, he noted that Grover Norquist’s Americans for Tax Reform (ATR) sent out an email shortly before committee to say a vote in favor of the bills is a violation of the group’s “No Tax Pledge.”

“Despite the United States Supreme Court’s ruling last year in South Dakota v. Wayfair, ATR still has major concerns with forcing online businesses to pay taxes to states where they have no physical presence and therefore no representation,” Norquist wrote.

Said Hall, “I do think we should have some more discussions . . . While we have spent a lot of time on these bills, there were a lot of changes made at the end of the negotiations. It seems to have been decided yesterday and we learned there were some unintended consequences of the bills.

House Democrats Thursday rolled out four alternative road funding bills that increase the 6% Corporate Income Tax another 2.5%, raise fees on heavy trucks and make pension income exempt from the income tax, and implements a flow-through parity tax of 4.25%.

The four bills also create a Rhode Island-style bridge toll program for trucks, which fits the caucus’ general theme of “If You Break it, You Buy it.” The bills are based on the feedback of thousands of residents at coffee hours and town halls across the state, said House Minority Leader Christine Greig (D-Farmington Hills).

“Instead of attempting to fix the roads at the expense of our children’s education, House Democrats are standing up for their future today with the introduction of these bills,” said Greig. “People from all over the state have made themselves clear. They want everyone to pay their fair share for the infrastructure we all use.”

All told, the bills are designed to bring in around $1.2 billion, half of the total that would be generated by Gov. Gretchen Whitmer’s proposed 45-cent gas tax plan. Greig said the folks her members talked to are OK paying more at the pump, but they believe the trucks that do the most damage to the roads should “have some skin in the game.”

Business benefits from great roads, too, so they should pay “their fair share,” as well, Greig said.

“This is a shared responsibility to make sure everybody is working together. It’s not an accounting gimmick. It’s a true solution and everybody shares in the success,” she said.

Rep. Jon Hoadley’s HB 4780 creates the bridge toll idea. In Rhode Island, tolls are collected from large trucks along six major highway corridors at 12 locations. This would bring in an estimated $50 million.

Rep. Yousef Rabhi’s HB 4781 raises the corporate income tax by 2.5%, implements a flow-through parity tax of 4.25% and brings back the income tax exemption on pension income, which the House Dems referred to as “the harmful retirement tax.” This would bring in an estimated $800 million.

Rep. Tim Sneller’s HB 4782 creates the “Fixing Michigan Roads” fund, where the money generated from the corporate tax and vehicle miles traveled tax would go.

Greig did emphasize in her release how the idea for the bills came from “real everyday experiences of the people in our state.”

“We went to the source and we asked people in our communities directly, what do you want to see done about our roads? And we came up with a way to make that happen,” Greig said. “Good policy always starts at the ground level, and that’s where these policies came from.”

Ananich On Roads: ‘I Think We’re Making Progress’

Senate Minority Leader Jim Ananich (D-Flint) told reporters Thursday that he believes progress is being made on how Michigan should “fix the damn roads.”

“We’ve had a lot of good talks,” the Flint Democrat said. “I don’t think we’re getting to where we’re getting close to pen-to-paper yet, but [Senate Majority Leader Mike Shirkey (R-Clarklake)] seems to have a pretty good approach for his caucus. I’ll let him talk about that, but he’s thinking about things he talked about a little bit at Mackinac.

“I’m not divulging anything new, but the idea around value and accountability as one component with financing and funding being another. I think that’s a smart way to think about roads in my mind. I’m not an engineer and I don’t automatically think that way. But I think that’s a good way to look at the approach.

“As long as we can get to a place where we can have a comprehensive road plan… I think we’re moving in that direction,” the Flint Democrat continued.

MIRS asked if Ananich feels the trust factor is vitally important at this juncture.

“Yeah,” he said. “We had a good quadrant meeting the other day. I talk to the Majority Leader almost every day. I talk to the Governor and I talk to House leadership — both sides. I feel like we’re getting to a place where we can trust each other when we say something. That’s important.”

Attorney General Dana Nessel said in a series of interviews that she would take action to decommission Line 5 “in the month of June” if talks between Enbridge and Gov. Gretchen Whitmer don’t go anywhere.

Nessel said that at the Governor’s request, she gave Whitmer and Enbridge time to work out a deal that could involve a “more expeditious process” of having Line 5 decommissioned, a promise made by Nessel during her campaign to do just that.

“But I’m not going to wait forever, either, just knowing that every single day that goes by is a day we could have a spill,” Nessel told MIRS in an interview on Mackinac Island last week during the Detroit Regional Chamber Mackinac Policy Conference.

Crain’s Detroit Business reported that the Attorney General said Tuesday she’d take action in 30 days, and also reported Whitmer said, “I don’t think that’s an unreasonable thing for her to suggest that we need to have a strategy that’s public within the next month or so” and added later that, “We’re moving forward and if we don’t have resolution, it’s going to play out, I think, in court. I don’t think that’s a good thing. But, ultimately, that might be where it’s headed.”

Whitmer spokesperson Tiffany Brown said Wednesday that the “Governor’s Office has had discussions with the AG’s Office” and that Whitmer is “committed to a solution that protects the Great Lakes, removes the pipelines from the Straits as soon as possible and provides for the Upper Peninsula’s energy needs.”

Nessel earlier this year declared unconstitutional the law passed in late 2018 that made way for the tunnel project. Whitmer ordered state agencies to halt work toward the tunnel project and has been talking with the company to get a deal done.

Nessel said this week she personally doesn’t support encasing a replacement Line 5 in an underground tunnel. However, she said she’s “not a policymaker” and that “no one elected me Governor” and that’s for the Governor to decide, policy-wise.

But for Nessel, she said her obligation is related to the existing underwater pipeline, as she said every day that Line 5 continues to run, “our state is in great peril.”

“I don’t know if the economy of the state of Michigan will ever recover in my lifetime, should we have a spill of the kind of magnitude that we possibly could have,” Nessel said.

Enbridge spokesperson Ryan Duffy said Wednesday, “We continue to have discussions with the Whitmer Administration on finding a path forward for the tunnel project.”

Duffy said the option to house a new Line 5 in an underground tunnel is “supported by more than half of all Michiganders, according to a recent survey commissioned by the Michigan Chamber of Commerce.”

Meanwhile, the Oil & Water Don’t Mix Coalition organized a demonstration Wednesday on Mackinac Island against Line 5 and the proposed tunnel idea.

Protestors in matching black t-shirts that said “No Line 5 Oil Tunnel” marched through the business district on the island up to the Grand Hotel, where they were turned away because the hotel is on private property.