Governor Signs Bill to Protect School Funding; Bipartisan Plan Requires Out-of-State Sellers to Collect Sales Tax

Contact: Susan Shafer (517) 335-6397

October 8, 2001


Governor John Engler has signed House Bill 5080 (PA 122 of 2001), legislation that allows Michigan to join a multi-state streamlined sales and use tax agreement. A recent study estimated that state and local government in Michigan will lose more than $500 million in sales tax revenue in 2001 as a result of remote, internet-based sellers who do not collect and remit such taxes.


Without this reform, revenue losses were expected to climb to $1.7 billion in 2006 and to more than $2 billion in 2011.


"The bipartisan support for this measure shows that Michigan is committed to fully funding our public schools," said Governor Engler. "By coming together, we protect our schools and give Main Street retailers a fair and level playing field."


About three-quarters of sales tax revenues are distributed to public K-12 schools with the balance going to local government for services such as police and fire protection and other basic functions.


The bill also specifies that at no time would its provisions create or implement a new tax on interstate electronic commerce.