ICI urges Michigan to repeal advice tax

The Investment Company Institute announced that it is urging the state of Michigan to repeal part of the recently enacted legislation that imposes a sales tax on “investment advice” services. The bill, which was approved by Michigan Gov. Jennifer Granholm on Oct. 1, includes a subsection that will impose a 6% service tax on “investment advice services.” Michigan hopes that the tax, which would become effective Dec. 1, will generate $16.8 million next year and will help fill a $1.75 billion budget deficit (InvestmentNews, Oct. 2) . In a letter to Michigan State Senator Nancy Cassis and Steve Bieda, Chairman of the Michigan House Tax Policy Committee, the Washington-based ICI said that imposing the tax would harm Michigan residents by discouraging them "from seeking financial advice to ensure their retirement security." The ICI also said that it “strongly urges” that the sales tax not be extended to tax any services offered by the investment company industry. According to the ICI, the effects on localized service taxes 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.