New Michigan Tax Legislation Impacts Financial Services Providers and Their CustomersWashington, DC, October 26, 2007 - The Institute strongly urges that the state of Michigan repeal a portion of recently enacted legislation imposing a sales tax on "investment advice" services. Background
Michigan House Bill No. 5198, approved by the state's Governor on October 1, 2007, includes Subsection 3d.(1)(e), which will impose a service tax on "investment advice services, as described in the North American Industry Classification System (NAICS) industry code 52393" effective December 1, 2007 ICI Position
In a letter to two Michigan officials, ICI states that the imposition of this service tax would harm Michigan residents by discouraging them "from seeking financial advice to ensure their retirement security." The Institute also strongly urges that the sales tax not be extended to tax any services offered by the investment company industry. The effects of such localized service taxes on investment company services would include: - additional costs to Michigan investors seeking to save for their retirement and other long-term needs through mutual funds;
- placing Michigan-based mutual fund firms at a competitive disadvantage with fund firms outside the state; and
- logistical obstacles to administering the tax efficiently and fairly.
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