“Our No. 1 priority was to fix the Democrats’ service tax that was widely despised,” said Matt Marsden, spokesman for Senate Majority Leader Mike Bishop, R-Rochester. “We lowered the surcharge to 13 percent. It’s less of a burden and takes into consideration the needs of the Big 3 (automakers) and manufacturing industry.”

A surcharge to the MBT also passed in the state House as a substitute, but the Senate plan makes a few key changes to the bill.

“The 33 percent surcharge was too high, so we lowered it to 13 percent,” Marsden said.

The bill also would see the surcharge end Jan. 1, 2011. The MBT is expected to take effect Jan. 1, 2008 while the service tax would be expected to start Dec. 1 if it isn’t repealed.

The bill would have to return to the House and be approved before it moves to Gov. Jennifer Granholm, who opposes it.

“The Senate Republican vote today is a vote to cut another $400 million from health care, education and public safety,” said Megan Brown, spokeswoman for Granholm. “(These are) cuts that will damage Michigan’s ability to compete for jobs — and that’s unacceptable.”

Many business leaders have been willing to accept the surcharge as long as the service tax is eliminated.

“The bill that passed also provides for complete repeal of the services tax and that is our main goal — hopefully we took a step forward,” said Rich Studely, executive vice president for the Michigan Chamber of Commerce.

While Senate Democrats opposed the Senate bill, if the House doesn’t agree on the Senate’s version, the bill will be sent back to committee.