Surplus going fast as lobbyists line up for tax and fee cuts
When it was announced that Florida was looking at a surplus of $845 million, it was only a matter of time before special interests would begin lining up seeking some of the excess money. Compared to last year’s surplus of $71.3 million, next year seems like a golden opportunity for lobbyists to make their clients happy.
Gov. Rick Scott has already declared that he wants to cut taxes and fees by $500 million, but he has yet to identify where he intends to cut.
Meanwhile, the one fee that Senate leadership has announced it wants to cut is the motor registration fee, which will cost about $233 million.
What about the House?
Well, on Thursday, the House’s Finance & Taxation committee held a three-hour hearing to listen to requests from groups representing big business, small businesses, realtors and retailers. The result: Lawmakers will have much to choose from in deciding which taxes and fees they consider eliminating or cutting -- way more than the surplus will cover, actually.
Here are just a few of those discussed Thursday.
1) Sales tax on rent of commercial property: Florida assesses a 6 percent rate on rent paid for commercial property.
Of all the tax reduction proposals. it’s a clear early favorite.
It’s popular on both sides of the aisle. Coupled with the ad valorem on the same property, many view this as a double tax.
“A tax on a tax is ridiculous,” said Rep. James Waldman, D-Coconut Grove. “I don’t agree on wiping it out completely, but I certainly don’t think we should have a tax on a tax.”
It’s got heavy hitters pushing it, too. Everyone from the Florida Chamber of Commerce, the Florida Realtors, the Florida Retail Federation, and Associated Industries of Florida said reducing the tax would be one of their top priorities in the upcoming session, which starts in March.
One thing that could scuttle the reduction is the amount it currently brings in: about $1.5 billion. Publix alone pays about $25 million on the tax, which Waldman estimates would pay for 500 teachers. Eliminating the entire tax in one year would have a devastating affect on a $74 billion budget. So expect lawmakers to propose phasing out the tax over a period of years. Lawmakers could also swap it out with an increase in something like a $1 increase on cigarettes or, one day, an Internet sales tax, which the Florida Retail Federation, Associated Industries and the Chamber support as a way to level the field between bricks-and-mortar stores and companies like Amazon.
2) Communications services tax: This applies for telecommunications, video, direct-to-home satellite, and related services. There are two parts: the Florida communications services tax and the local communications services tax. The state portion of the tax includes both state tax and gross receipts tax. The total tax rate for the Florida portion is 9.17 percent. The rate for the state tax is 6.65 percent. The total rate for the gross receipts tax is 2.52 percent. When the local share is added, the rate can be as high as 14 percent.
Again, cutting this tax back has strong support from the Florida Chamber of Commerce and Associated Industries. Satellite services don’t pay the tax, so a strong fairness argument could be made.
“It’s too high and it’s complicated,” David Hart, the chamber’s executive vice president, told the committee.
Still, this tax brings in about $1 billion, so again, it would have to be phased out and lawmakers need to offset the cost somehow.
3) Motor vehicle registration fee: Along with the Senate, this is finding wide support in the House. It would cost $233 million, but Democrats and Republicans seem to like this one. While savings for middle class families would be limited, companies that have large fleets could save big bucks.
But while it got a plug from some, like Associated Industries, this fee cut was barely mentioned by others on Thursday.
4) More sales tax holidays.
This is pushed mainly by the Florida Retail Federation.
Last year’s back-to-school sales tax cost about $31 million, according to Randy Miller, executive vice president of the group. He said he’d like a hurricane sales tax holiday as well, which the state hasn’t had since 2005. Then, it cost about $11 million for people to buy items at places like Home Depot and Lowe’s to safeguard their homes.
5) Corporate filing fees.
Businesses pay $150 to file annual reports with the state, and must pay other fees as well. Bill Herrle of the National Federation of Independent Business said these fees are “disingenuous.” He proposed a “corporate creation holiday” that could encourage more business. This fee brings in about $276 million, and no one else mentioned it as a priority, so it looks like a long shot.
After the meeting, the chair of the committee, Ritch Workman, R-Melbourne, said his goal was a tax break that all Floridians would notice.
“RIght now, everything is on the table,” he said.