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$1-billion tax plan ready for House consideration

The battle over taxing cable TV was won before the first shot was fired.

The powerful cable TV industry escapes additional taxes under a new proposal the state House will begin looking at this week. The House plan, crafted by House Finance and Tax Chairman Mike Abrams, would raise more than $1-billion by raising corporate taxes and eliminating exemptions on a variety of services.

Abrams also dropped from his plan a proposed tax increase for hospitals, which mounted a ferocious lobbying assault to crush a tax increase pushed by Gov. Lawton Chiles a year ago.

Abrams' plan tracks the $1.3-billion tax proposal made last month by Chiles, with a few key differences:

Chiles wanted to add a 2{ percent tax to water, sewerage, garbage and cable TV. Those household taxes are out of Abrams' plan.

Chiles wanted to raise the hospital tax by a half percent, an idea hospitals branded a "sick tax" a year ago. Chiles brought it back in his new package.

Chiles wanted a $200 across-the-board minimum tax on all Florida corporations. Abrams' plan doesn't include it.

Chiles proposed reducing the interest deduction corporations can take on their corporate income tax from 100 percent to 90 percent. Abrams wants to reduce the interest deduction to 80 percent.

"I think it has a reasonable shot," Abrams said of his proposal Monday night. "I think it has a lot of what the governor has (in his plan). I think it's better."

Chiles has said he is willing to look at other alternatives as long as the taxes aren't regressive. He has said he does not want to raise the sales tax above its current statewide rate of 6 percent because sales taxes fall disproportionately on poor people.

But he is open to other options on applying the sales tax to hundreds of services that now are exempt.

Among services included in Abrams' proposal are pest control and air express services. But he left out numerous services Chiles proposed taxing. Among those dropped were banking and financial services and credit agencies.

Chiles said he was glad to see some movement on taxes after legislators told him for weeks they hadn't heard any support for higher taxes.

"I believe they're beginning to hear from some people," he said.

Chiles' chief of staff, Jim Krog, spent part of Monday going over the plan and negotiating some details.

"I think it's a pretty good first effort," Krog said. "It has a lot in it we can support."

Abrams said he didn't think dropping cable TV from the tax menu amounted to a special break. He said it is unfair to tax cable the same way as electricity and telephone utilities because cable TV already is subject to sales tax.

"Why should we hit them again?" he asked. "The whole idea is not to have people walk out the front door and get hit with a tax."

Abrams' plan, like Chiles', would raise the intangibles tax on stocks, bonds and notes by 50 cents per $1,000 (exempting the first $100,000 for individuals and $200,000 for couples). Chiles also wanted to raise $17.3-million by eliminating the commission that alcoholic beverage, tobacco and gasoline wholesalers take for collecting excise taxes.

Both plans also subject Florida's 55,000 "S" corporations to the corporate income tax for the first time. By electing to be an S corporation, businesses qualify for the advantages of incorporation without having to pay corporate income tax. They must be a domestic corporation and have fewer than 35 shareholders, among other requirements.

In most states, the fact that S corporations avoid corporate income tax is not an issue because corporate profits channeled to shareholders get taxed as personal income. In Florida, where there is no personal income tax, shareholders avoid taxes entirely.

Florida is the only state that levies a corporate income tax but not a personal income tax.

Abrams' tax proposal will be up for discussion Wednesday in the House Finance and Tax Committee.

QUOTE OF THE DAY

"Why should we hit them again? The whole idea is not to have people walk out the front door and get hit with a tax."

REP. MIKE ABRAMS,

discussing the dropping of

a cable TV tax proposal

Up next:BIRTHS

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