Taxing services proves tricky Business owners see unfairness in the selection of targeted firms October 2, 2007
BY BEN SCHMITT, CHRISTINA HALL and JOHN WISELY
FREE PRESS STAFF WRITERS
Kim Barno, a Rochester Hills astrologer, didn't see it coming.
She said she was floored to learn the Legislature added fortune telling early Monday to the expanded list of business services now covered by the state's 6% sales tax. Some of the other services for which customers will be taxed in order to help balance the state budget: massages, shoe shines,
tanning salons, matchmaking, and baby shoe bronzing.
Barno, who owns Celestial Treasures, doubts the state can balance its budget by taxing her service, which generates little revenue.
"We do it because it's a passion and unlike government, we want to help people," Barno said. "They have been at this for two weeks and this is what they come up with?"
Customers of such businesses didn't like the news either.
"I'm kind of in shock," Chris Tarnacke, 34, of Flat Rock said after a 15-minute tarot-card session at Boston Tea Room in Wyandotte, which offers astrology, and tea leaf, tarot card and palm readings.
"You wouldn't think they would tax such a thing."
Ed Grice, general manager of Boyne Mountain golf and ski resort near Petoskey, got good and bad news.
The good: The golfers at his resort won't be taxed.
The bad: The skiers will.
But Grice wasn't celebrating the victory for golfers.
"If they had taxed everything, I think it would have been more fair," he said.
Even escort services couldn't escape the 6% tax.
"There's nothing I can do but pass it on to the consumers," said a man who identified himself as Tony, answering the phone for Marquise Escorts. "We don't have a choice. That's life."
Betsy Breckels, who owns Breckels Massage Therapy in Grosse Pointe Park, said lawmakers are mistaken if they think massage therapy -- now among the services being taxed -- is a luxury.
"A lot of people need massage therapy for part of their wellness," she said of people with chronic back and neck problems. "This is going to be hard on us as a small business."
A $75, hour-long massage, for example, will now cost $79.50 with the sales tax.
Bob Neugebauer, owner of Bob Neugebauer Travel, said the new tax on travel agent services is another blow to his Roseville business that will have to be passed on to customers.
"It's not good for the traveler and it's not good for the travel agent, and it's not good for the tour operator," the 72-year-old Shelby Township man said. "I just feel that ever since Sept. 11, the commissions from the airlines, the Internet, the state economy that we're in and now the tax, I don't really see how it's going to be very possible for the travel agent to maintain his business."
V.I.P. Tanning has eight locations in metro Detroit and one in East Lansing. Matthew Kassab, manager of the Clinton Township store, said his customers will take the hit.
"If you're going to tax luxuries, tax them all," the 25-year-old Rochester man said.
Golf green fees, sports and concert tickets, and haircuts escaped the tax expansion.
That makes hairstylist Deanna Maffetone relieved.
"That's music to my ears. That's great," said the 35-year-old, who works at Studio 58 in Mt. Clemens.
Legal services also were not taxed as part of the final budget package.
"I don't think for most people that legal services are discretionary," said Leslie Logan, a Bloomfield Hills-based lawyer. "I think it would be a hardship."
State Treasurer Robert Kleine said that the state's goal was to tax discretionary services under broad headings like personal services.
Contact BEN SCHMITT at bcschmitt@freepress.com.