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AN OLD TAX PLAN MAY STILL RISE FROM ASHES

He saw it coming.

John McKay was president of the Florida Senate a few years back, and concluded that the state's tax system had long ago outlived its usefulness.

He decided the state relied too much on a regressive sales tax full of exemptions and exclusions worth tens of billions of dollars a year, many favoring big business.

A real estate broker from Bradenton with a bit of street fighter in him, McKay spent virtually all of his political capital on one issue: taxes.

His plan was to lower the sales tax rate from 6 percent to 4.5 percent and close the exemptions for such things as charter fishing boats, accounting and legal fees, stadium skyboxes and ostrich feed.

History was repeating itself, sort of. Nearly 15 years before, Gov. Bob Martinez and the Legislature voted to tax most professional services. Intense lobbying by businesses, including newspapers, made them back down and repeal it.

What McKay wanted most was to drag those tax breaks out of the shadows and require the Legislature to vote to re-enact them. He knew most lawmakers wouldn't be able to keep voting for them.

McKay was the rare Republican who sought an end to business as usual in Tallahassee, and big business fought him. The TV broadcasting lobby went after him. Gov. Jeb Bush and the House accused him of pushing a backdoor tax increase.

Bad timing helped doom McKay's agenda. He ran the Senate right before Bush sought re-election, and his House partner was Tom Feeney, a small-government firebrand eyeing a congressional seat.

The status quo prevailed, and McKay returned to Bradenton and real estate. And now the state again finds itself in an ugly fiscal situation, forced to cut $1.5-billion from this year's budget and who knows how much from next year's and the year after.

The reason: too heavy a reliance on a consumption-based sales tax, which ebbs and flows through the booms and busts of each economic cycle.

What McKay saw coming in 2001 has happened again, which is why legislators will soon return to Tallahassee to cut the budget again.

And where's John McKay these days?

He's one of 25 people on the Taxation and Budget Reform Commission, the blue-ribbon panel reborn every two decades to take a hard look at Florida's tax system. The panel may be the last hope for changing our tax structure.

McKay is waiting for the right moment to bring up the subject of sales tax exemptions. "I certainly plan on it," he said. "I think it has to come at the proper time. It certainly needs to be explored."

As McKay sees it, Florida is still in big trouble, tax-wise. People are already upset about property taxes, and when they can't buy or sell their houses, they stop buying other consumer goods, too.

If too many people stop buying Buicks and refrigerators, the state doesn't have the money to pay teachers or prison guards. But in McKay's view, the rich always need lawyers or accountants, so if those purchases were taxed, the money would keep flowing.

"When you hold the financing mechanism of the state together with chewing gum and baling wire, at some point it's going to break," McKay said.

He saw it coming, all right.

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

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