A lively panel discussion at the St. Joseph County Economic Development Corporation’s annual meeting explored scenarios that may play out as the state government tackles the job of replacing the $1.8 billion that the SBT generated.

Moderator Michael Chevy Castranova, editor of the Business Review, noted that Governor Granholm’s plan is to replace “dollar for dollar” the revenue that would otherwise be lost with a Michigan Business Tax.

Taking question submitted by audience member, Castranova asked, “What’s wrong with Governor Granholm’s plan?

Charles Hadden, VP of government affairs for the Michigan Manufacturers Association, said, “I think, if the governor was really serious about coming out with a tax plan, she would have done so before Thanksgiving.”

John Llewellyn, VP of government relation for the Michigan Bankers Association, said the governor’s plan had a “lot of thought behind it,” and it will be passed in the Michigan House with more difficulty in the Senate.

Panelist Rick Shaffer, 59^th district state representative, said, “We need to hear a lot more about it (governor’s plan).”

“It was essentially cut and pasted from the SBT,” Bob McDonough, community director for Pfizer, said of the governor’s plan.  He added that the SBT has some “good points,” and it was uncertain what a change away from it would mean for Phizer.

State Sen. Cameron Brown(R-Fawn River Township) sought to frame the issue in perspective, asking, “what kind of tax do we want, how much do we want to collect, and what is our overreaching goal?”

Brown said we don’t want a complicated tax, but need one that is “simple, fair, stable, and a growth generator.”

George Erickcek, senior regional analyst for the W.E. Upjohn Institute, said that a new scheme should broaden the base of who pays taxes, while lowering the rate.  The tax should be stable, he said, but should not be cut to the point that large number government jobs and services are lost.  That, he said, is a negative impact.

McDonough said that a fairly small number of businesses statewide paid the bulk of SBT taxes, and that those companies were not the ones seeking its repeal.  “Our problem isn’t the SBT,” he said. “It’s the personal property tax,” the tax imposed on business assents, primarily equipment.  That tax, he said, “makes it (Michigan) less competitive than almost any other state.”

Panelists agreed that the overall business climate is Michigan must be improved, and that Michigan’s core business the auto industry, is still the hinge pin.  Global competitiveness is a fundamental issue.

“For us to assume that we in Michigan can stay on this little peninsula and not engage the other five billion” on this planet, Llewellyn said, is not realistic, “The globalization of this economy is something the people of Michigan have to address.”

“We are a one horse town with a sick pony,” McDonough said. “Until we diversify, we are going to have a problem.”  The issue is not the SBT, he said, and how we deal with it is “not what’s going to pull us out.”

Erickcek said Michigan “needs to attract highly skilled workers. “We are a state that has spent its life attracting physical capital.”  He noted that Michigan should take a look at its income tax, especially since it is one of only two states that tax at a flat rate.

Hadden said that whatever tax scheme replaces the SBT “will not be a forever tax, but should be as broad based as possible.  We believe everyone ought to pay something.”

McDonough said that the tax issue will be resolved shortly.

“There will be a tax this year.  It needs to be done by the fourth of July,” he said.