Individual taxpayers may not feel much pain, but the compromise budget bill passed by Congress last weekend will have some negative effects on businesses that count on generous consumer spending. "The tax package takes money out of people's pockets," said Mark Vitner, an economist with Barnett Banks Inc. in Jacksonville, who said the retail and tourism sectors of the Florida economy both will be hit.
"People on family vacations will have less money to spend," Vitner said. "Consumers will have less money to spend on just about everything."
Washington's desperate search to reduce the federal deficit led to a complicated budget package designed to affect most profoundly upper- and upper-middle income households. But likely it will have some effect on everyone.
The package was approved Saturday by the House of Representatives and Senate. President Bush said he plans to sign into law the thorny compromise, which resulted from more political jousting than Capitol Hill has seen in years.
Under revisions to the nation's tax code, the government would collect more money through higher taxes for Medicare, various income-tax changes and additional excise taxes for gasoline, tobacco, alcohol and some luxury goods.
The 10-percent luxury tax would apply to sales of new cars
with sticker prices above $30,000, furs and jewelry worth more than $10,000, boats worth more than $100,000 and private airplanes that sell for more than $250,000.
Scott Binder, sales manager for Bisset BMW-Volvo in Holiday, was concerned about whether the wealthy will cut back their spending or simply pay the tax. "I honestly don't know what's going to happen," he said.
But at Pirate's Cove Marina in Dunedin, general manager Bill Ernst said he is confident spending won't slow at his shop. Ernst said in the short-run, he expected business would go up, as customers looked to beat the tax increase.
Over the long run, Ernst said, he doubted he would be pinched. "Boating today is expensive," he said. "It takes people intelligent with money. And if they're ready for a new boat, they'll always buy."
If yacht buyers aren't blinking, the beer crowd may.
Phil Katz, vice president for research at the Beer Institute in Washington, said a tax increase of 32 cents on a six-pack will unjustly hit lower and middle-class people.
"This certainly is a regressive tax," Katz said.
Bruno Falkenstein, manager of the Hurricane Seafood Restaurant in St. Petersburg Beach, said beer sales slacked off in the summer when he passed along a state tax hike.
The Hurricane raised the tab for a draft beer from to $1.55 from $1.35 _ its first price increase on beer in four years. As a result, Falkenstein said, customers drink less and beer sales have dropped.
With an additional hike, he expects another drop in sales.
"Adding the federal tax, business will go down more, which in turn will cause sales tax revenue to go down," asserts Falkenstein, a city commission member in St. Petersburg Beach.
Other businesses are poised to find out more.
Most Tampa Bay area military contractors make components for projects whose fates have not been determined. For example, Hercules Inc. in Clearwater makes electronic sensors for missile guidance and radar use.
"It's not like we make wings for the B-2 (stealth bomber) or anything," said spokesman Paul W. Griscti. The B-2 program was saved for at least another year by Congress.
Meanwhile, William Castoro, executive director of the Pinellas County Industry Council, said he was relieved to find tax-exempt industrial development revenue bonds were unaffected by the budget wrangling.
The bonds are used to help businesses expand or relocate to Pinellas County.
"We've been lobbying like crazy," Castoro said. "I was afraid we were going to lose it, that they would be eliminated completely."