SALES/USE TAX EXEMPT: LIQUOR EQUIP.                                 S.B. 369 (S-1) & 370 (S-1):

                                                                                        REVISED SUMMARY OF BILL

                                                                                      REPORTED FROM COMMITTEE

Senate Bill 369 (Substitute S-1 as reported)

Senate Bill 370 (Substitute S-1 as reported)

Sponsor:  Senator Wayne Schmidt (S.B. 369)

               Senator Jack Brandenburg (S.B. 370)

Committee:  Commerce

CONTENT

Senate Bills 369 (S-1) and 370 (S-1) would amend the Use Tax Act and the General Sales Tax Act, respectively, to extend the industrial processing exemption under each Act to tangible personal property used to manufacture alcoholic liquor sold at retail through the manufacturer's own locations.

"Alcoholic liquor" and "manufacturer" would be defined as those terms are defined in the Michigan Liquor Control Code. (Under the Code, "alcoholic liquor" means any spirituous, vinous, malt, or fermented liquor, powder, liquids, and compounds, whether or not medicated, proprietary, patented, and by whatever name called, containing one-half of 1% or more of alcohol by volume fit for use for food or beverage purposes as defined and classified by the Liquor Control Commission. "Manufacturer" means a person engaged in the manufacture of alcoholic liquor, including, but not limited to, a distiller, a rectifier, a wine maker, and a brewer.)

The bills are tie-barred to each other.

MCL 205.94o (S.B. 369)                                                    Legislative Analyst:  Jeff Mann

       205.54t (S.B. 370)

FISCAL IMPACT

The bills would reduce both General Fund and School Aid Fund (SAF) revenue by an unknown and likely negligible amount. According to the 2012 Economic census, distilleries in Michigan made $168,000 in capital expenditures while wineries spent $2.7 million and breweries spent $16.6 million. The proportion of these expenditures that would be affected by the bills is unknown, but if 20% were affected and the estimate were representative of the average annual capital expenditure, the bills would reduce General Fund revenue by approximately $156,000 and SAF revenue by approximately $78,000 per year.

Date Completed:  6-18-15                                                         Fiscal Analyst:  David Zin

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.