2012-06-09 / Opinions

The City Can Find Other Ways For Revenue

To the Editor:

Contrary to last week’s Town Crier headline, the recently introduced Michigan Senate bills 1150 and 1151 causing a stir in Mackinac Island’s city government do not “Strip City Power to Franchise.” The last part of the headline was accurate, as one bill definitely does “Cut (the Franchise) Fee.”

The first bill merely “levels the playing field” for Michigan municipalities regulating ferries. Instead of being treated as a “special” municipality, the City of Mackinac Island would have the same regulatory power every other fourth class city (or general law village) in the State of Michigan has. Under SB 1150, I believe that St. Ignace, Mackinaw City, and Mackinac Island would all have equal regulatory authority over ferry services to and from those municipalities.

Does Mackinac Island need special powers because it’s more dependent than anyone else on ferry services to connect it to the rest of the world? Is it any more dependent on ferry service than Beaver Island, Drummond Island, or Bois Blanc Island?

Instead of taxing itself enough to provide services to the visitors it earns its living from, Mackinac Island has chosen to generate revenue by taxing its ferry services at an inordinately high level. Apparently some Michigan officials take exception to Mackinac Island’s choice, and are trying to remove that option.

I suggest that Mackinac Island should lobby Michigan’s legislature to enact a “resort tax” modeled after Ohio’s Resort Area Gross Receipts Excise Tax (RAGRET), which narrowly defines resort communities eligible to collect this tax. The RAGRET is a 1.5% tax on the gross receipts of all businesses serving the qualifying resort municipalities.

This RAGRET is levied on a long list of retail and wholesale businesses, receipts from leases and rentals, plus many services. It’s collected from both businesses based in the resort community and businesses based on the mainland selling to the resort communities. The list of exempt sales is pretty short. This Ohio tax attempts to generate revenue to provide services to visitors by spreading this extra tax burden to all who profit from serving those visitors.

Instead of committing resources now to defend an indefensible charter provision, the City of Mackinac Island should redirect those resources toward the enactment of a “resort tax” which would create a small burden on many, rather than the franchise fee’s huge burden on three businesses.

Wouldn’t a minuscule raise in millage replace the revenue lost due to the elimination of the excessive franchise fees? I guess that’s not an option in our “no new taxes” world. Or is it a “no taxes, no services” world? Or even a “tax them, not me” world?

Daniel Robbins

Mackinaw City

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