SEVERANCE TAX IN LIEU OF ALL OTHER TAXES

RAB-89-22.     The purpose of this Bulletin is to clarify the provision in the Michigan Severance Tax Act, MCL 205.315, stating in part:  "[T]he severance tax herein provided for shall be in lieu of all other taxes, state or local, upon the oil or gas, . . ."  The question has come up as to whether or not this exclusion extends to the Michigan taxes currently in effect (i.e., the Michigan sales, use, and single business taxes).

It is the Department's position that this provision extends only to the ad valorem property taxes that were in effect at the time the above-referenced section was enacted (1929).  If is was the legislature's intent to extend this provision to the sales, use or single business tax, a provision for exclusion would be contained in those individual Acts, all of which were enacted after the exemption provision of the Severance Tax Act.