Canadian Trucking Alliance claims victory over Michigan SBT

TORONTO (Oct. 10, 2000) — A compromise by Michigan lawmakers over the imposition of the state’s Single Business Tax (SBT) on foreign trucking companies could cut the SBT liability of Canadian trucking companies by about two-thirds in combination with concessions achieved earlier in the year, according to the Canadian Trucking Alliance.

The amount of employee wages and salaries, for which the SBT is applicable, will be reduced by a minimum of 50%. Currently, a full day’s wages, salaries, and benefits of Canadian workers that spend any part of a day in Michigan must be added to the tax base. Compensation accounts for about 70% of the tax base for the SBT.

The deal allows Canadian carriers to choose one of two methodologies for reducing the amount of employee compensation included in the tax base:

1. Reduce compensation paid to employees with contact with the US by a flat 50%; or

2. Apportion total worldwide compensation by the proportion of miles traveled in the US and then by the proportion of Michigan miles over total worldwide miles.

The SBT tax rate (currently 2.1%) will also be reduced by 0.1% per year over the next 21 years until it is completely eliminated.

Earlier this year, Michigan lawmakers decided not to seek retroactive tax payments beyond the beginning of this year, and to allow the Canadian truckers to receive credit for their Canadian miles when calculating the pro-rata formula for the tax base.