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State to keep workers' comp premium taxes

A rule change that will let Florida keep $20-million in unintended workers' compensation premium taxes won approval Tuesday from Gov. Lawton Chiles and the Florida Cabinet.

The panel, however, also directed the Department of Revenue to draft a second rule to halt any future collection of the additional revenues.

A motion by Insurance Commissioner Bill Nelson that included both actions passed witha 6-1 vote. Secretary of State Sandra Mortham cast the opposing vote. She wanted to refund the $20-million, saying if it's wrong to collect the extra money in the future, it was wrong in the past.

"My position is what's done is done," Nelson responded. Revenue Director Larry Fuchs said the state already has spent the money.

The extra, unintended taxation came from a combination of insurance legislation passed in 1994 and a court ruling that changed a formula used to collect retaliatory tax on out-of-state insurers operating in Florida, Fuchs said.

The result, he said, was not what the Legislature had intended.

The retaliatory tax is designed to discourage other states from taxing Florida companies at higher rates than their own companies. If another state does tax Florida companies more, then Florida retaliates with a similar tax on companies from that state.

The complex issue left Cabinet members befuddled at times.

"I don't purport to understand this," said Chiles, who initially asked for a delay on the proposed rule affecting future taxation.

After a lengthy discussion, the issue became clearer and the panel agreed to vote on both elements of Nelson's motion, offered as a substitute for Mortham's proposal to refund the $20-million.