Granholm defends sales tax expansion

LANSING, MI – While the Legislature's on its spring break, Governor Granholm is still pushing for her budget plans. The governor wants to extend Michigan's sales tax to cover services and not just products. She'd make the tax more palatable by lowering the rate to five and a half percent. The governor says the revenue would help avert a new round of cuts to schools.

Granholm appeared Monday on MSNBC. She says the growth in the economy has been in services sectors that traditionally have not been taxed. She says that's why sales tax expansions are being debated in half a dozen states.

"All these other states are doing the same thing because it is more of a 21st century model," Granholm says. "Our tax structure in Michigan was based on an old model and a manufacturing base. Our economy we're building is a new model. We have to build a tax structure that comports with a new economy."

The governor still has not been able to round up the votes for her plan. Republicans, in particular, remain opposed to any new taxes to balance the budget.