Florida Legislature doesn't pass most of session's revenue and tax reform proposals

The one new tax, $1 per pack on cigarettes, was pushed by hospitals, and lung, cancer and heart associations.

SCOTT KEELER | Times illustration

The one new tax, $1 per pack on cigarettes, was pushed by hospitals, and lung, cancer and heart associations.

TALLAHASSEE — Florida lawmakers began the session with bold ambitions to examine Florida's tax code, repair tax inequities and find new revenue.

They ended up with a single new tax and a smidgen of reform. They approved a tax increase that offered the path of least resistance — a $1 per pack increase on cigarettes — plus one tax reform and two constitutional amendments that will offer some people tax relief but further complicate the tax system.

"Everything I said we would put on the table to play out, we did," said Sen. Jeff Atwater, R-North Palm Beach, who told his chamber at the start of the session that they would review "every line item of every budget'' and "our tax structure."

The tobacco tax, which includes a $1 per ounce tax on smokeless tobacco, will raise an estimated $900 million next year, if signed into law by the governor. It was opposed by the tobacco lobby, but not aggressively, and was pushed heavily by hospitals, and Florida's lung, cancer and heart associations. It registered 60 percent to 70 percent approval ratings in recent public opinion polls.

The Florida Senate considered more than the cigarette tax. After weeks of hearings, it proposed closing corporate tax loopholes, imposing sales taxes on Internet sales, closing tax loopholes for out-of-state travel companies, eliminating inequities in sales tax exemptions and even raising new taxes on bottled water. All of those ideas except one were rejected.

The House proposal was more modest: imposing the sales tax on a handful of currently untaxed items, including newspaper and magazine subscriptions and large charter boats, in exchange for a plan to suspend the state sales tax for three days to allow people to buy hurricane supplies and back-to-school items.

The one reform that survived: a narrowly written plan to stop corporations from creating shell companies to avoid paying documentary stamp taxes on real estate transactions. No other tax increases survived. Atwater blamed the more conservative House.

"We were being told every day it was not going to be accepted," he said.

Just to get the cigarette tax into the budget, the House had to bypass its own Finance and Tax chairwoman, Rep. Ellyn Bogdanoff, R-Fort Lauderdale, who repeatedly said she would block the cigarette tax if it came through her committee.

In the final week, legislators approved one bill that could open the door to local tax increases: a measure to allow all counties in the state to ask voters whether to impose a sales surtax of up to 1 percent for fire-rescue services.

And, amid a last-day push by Gov. Charlie Crist and Florida Realtors, lawmakers agreed to pass two bills that put constitutional amendments on the ballot in November 2010 to carve new loopholes in the state's property tax code.

One would give first-time home buyers — those who have not owned a home in Florida for eight years — a tax break equal to 25 percent of a property's market value up to $100,000.

The other would place a 5 percent cap on the annual increase in commercial and nonresidential property tax assessments.

"This year, all we did was make the situation worse," said Rep. Scott Randolph, D-Orlando, a member of the House Finance and Tax Council.

The changes exacerbate the inequities of the property tax system, placing more of the burden on new property owners, he said.

"The bubble group — the people who bought a home in Florida between 2001 and 2007 — will be guaranteed to be paying the highest property taxes in the state for the rest of the time," Randolph said.

Mary Ellen Klas can be reached at meklas@MiamiHerald.com.

Florida Legislature doesn't pass most of session's revenue and tax reform proposals 05/02/09 [Last modified: Monday, May 4, 2009 11:07am]

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