Florida tax panel puts legislators in a corner

For once, legislators must look far into the future. What they see terrifies them.

They'll have to raise the sales tax. They'll have to repeal sales tax exemptions. The people will demand it. A read-my-lips moment in Tallahassee.

This explains the anguish over Monday's vote by the Taxation and Budget Reform Commission to ask voters to replace $9-billion a year in state-required property taxes for schools with a sales tax increase of up to a penny and a repeal of sales tax exemptions to ensure schools are not short-changed. This is way, way beyond the quick-fix patchwork of eliminating vacant jobs, and the howls of protest from the establishment shows that the tax panel has done its job by shaking up the status quo.

The ballot language voters would see, which must first survive a second vote by the 25-member panel, doesn't give lawmakers much maneuvering room. In listing revenue choices, the proposal uses "and," meaning the Legislature must consider all options listed.

Former Senate President Jim Scott, the panel's vice chairman, said he'll try to clarify that as a drafting committee tweaks the language. He said the idea was to give lawmakers a range of options "and how they do it is basically going to be up to them."

Either way, a future Legislature will have to find $9-billion in a single year to replace money now raised from property taxes. That's a lot of money.

If 60 percent of voters approve the swap, the magnitude of the task awaiting the 2010 Legislature becomes clearer once you realize that a 1-cent sales tax hike generates about $3.5-billion, about one-third of the replacement money needed. This raises the possibility of the unspeakable: putting a tax on services.

But this is neither a tax increase nor a tax cut. It's a tax replacement. The more property tax you pay, the better you will make out, and renters and tourists are among the losers.

In the wording of the ballot language, which by law cannot be misleading or ambiguous, it is "replacement of school property taxes" by "repealing sales tax exemptions, a one cent increase in the sales tax rate and other legislative spending reductions or revenue initiatives." (The proposal is at www.floridatbrc.org, under member proposal CP2E1).

Here's the hard part. To make up for that greatly reduced property tax bill, a future Legislature must affirmatively vote to impose a tax that does not now exist, and maybe in 2010, an election year.

Finding all that replacement money is especially irksome for the majority Republicans because it will force them to disavow their line-in-the-sand opposition to raising taxes, hence the read-my-lips moment.

Eliminating just one of the 250 or so exemptions looks like a broken Republican promise because they have locked themselves in a straitjacket. By their definition, repeal of an exemption is a tax increase because someone will pay a tax today that he didn't pay yesterday.

What's dancing through Republican lawmakers' heads, as Sen. Mike Fasano of New Port Richey described it, are images of direct mail pieces in the 2010 cycle. ("So-and-so lied. He raised your taxes. We can't trust him.")

In the Capitol, grumbling can be heard over House Speaker Marco Rubio's cheerleading for the tax swap. Easy for him to say, they said, because the term-limited Rubio won't be here to implement it.

It's not so hard. If the day comes that legislators have to carry out the will of the people, their escape hatch can be the same one they used when the class-size amendment passed: We don't want to do this, they can say, but voters demanded it, and we must obey the Constitution.

Pity not the politicians. They did it to themselves. They passed billions of dollars worth of tax cuts in the 1990s while refusing to review a single sacrosanct sales tax exemption.

Now the economy is tanking, the budget is bleeding and a Republican-led Taxation and Budget Reform Commission demands change. It's no coincidence that the panel is top-heavy with ex-legislators who now appear to see the errors of their ways.

Steve Bousquet can be reached at bousquet@sptimes.com or (850) 224-7263.

Florida tax panel puts legislators in a corner 03/22/08 [Last modified: Monday, March 24, 2008 8:40pm]

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