Use tax: exemptions; delivery and installation; exempt from use tax. Amends secs. 2 & 21 of 1937 PA 94 (MCL 205.92 & 205.111).
The bill aims to make notable adjustments to how use tax revenue is allocated, especially in relation to aviation fuel. It specifies that 35% of the tax collected from aviation fuel will be directed to the state aeronautics fund, while 65% will go to the qualified airport fund, empowering these bodies to promote and regulate aeronautical activities. This redistributive nature potentially enhances funding for local airports and encourages aviation-related economic development in Michigan.
House Bill 4040 proposes amendments to the Use Tax Act, specifically targeting the definitions and treatment of various terms related to tax exemptions. This bill amends sections 2 and 21 of the existing statute, providing clarity on the classification of several entities and concepts, such as 'person', 'use', 'storage', and 'seller'. A significant addition to the bill includes detailed classifications regarding how tangible personal property is treated under the use tax, particularly concerning the conversion of previously exempt property to taxable use.
Discussion around HB 4040 has shed light on different interpretations of existing tax laws and potential impacts on local governments. Some stakeholders express concerns that the amendments could restrict local entities' abilities to manage and govern their taxation policies effectively. The provision regarding the exclusion of delivery and installation charges may also raise questions among consumers and businesses about the total tax burden and fairness of the tax system.
The bill also includes remedial clauses, asserting that its provisions apply to ongoing civil actions at the effective date of the amendments. This is likely an attempt to clarify any legal uncertainties that previous enactments might have caused, thereby ensuring seamless enforcement of the updated use tax provisions.