Lobbyists for the bottled water industry are offering an olive branch in the impending tax fight over their product. They're agreeing to let lawmakers remove the exemption on bottled water and impose the sales tax. The hitch: the sales tax would be paid in lieu of the governor's plan to impose a six cents severance tax on every gallon of water used for bottled water.

"We're generally not opposed to the repeal of the sales tax exemption and we're working to develop a potential compromise to generate revenue and still benefit consumers who use bottled water as their primary drinking source,'' said Lane Stephens, lobbyist for Nestle Waters, the nation's largest bottled water company with two plants in Florida. A six-cents a bottle tax would be paid by consumers at the point of sale, as it now is when consumers buy soft drinks.

The governor proposes that the Department of Environmental Regulation impose a 6-cents per gallon tax on water "severed" from the state by companies that use it to profit 's from state water. It would include the 5.4 million a day pumped from state aquifers and springs, as well as all the water taken from municipal waters supplies. More on that plan here.

The severance tax raises an estimated $70 million a year; the sales tax raies $43 million. One reason for the difference: the severance tax would be applied to all water used for bottling in Florida, even bottled shipped for use out of state, while the sales tax would be paid by consumers at the point of sale.

Florida bottlers worry they could be at a competitive disadvantage in other regions if the severance tax is imposed. It's also easier to pass along the cost of the sales tax to consumers than it is to pass along the cost of the severance tax.

Department of Environment Republican has not released its proposed draft for the bill that would include the governor's severance tax proposal but it presented the idea to a two Senate committees Thursday.

Florida specifically excludes bottled water from the sales tax, even though it imposes the sales tax on other beverages, like soft drinks and exercise drinks. The Senate is considering a bill by Sen. Evelyn Lynn, an Ormond Beach Republican, that would remove the sales tax exemption on bottled water by imposing the sales tax at the point of sale. The House Finance and Tax Committee has including the bottled water exemption as one of the 51 sales tax exemptions under scrutiny this session.