1. News

Florida House omits centerpiece of Gov. Rick Scott's $1 billion tax cut plan

Published Jan. 29, 2016

TALLAHASSEE — The centerpiece of Gov. Rick Scott's tax cut plan may have already been dealt a fatal blow as state legislators instead are considering a wider range of sales tax reductions on everything from guns to smartphones in an election year.

The House rolled out a tax cut proposal this week that has almost $1 billion in reductions like Scott has requested, but it omits the Republican governor's biggest idea: elimination of corporate income taxes on manufacturers and retail businesses. Scott has made that tax cut a central part of his push to diversify the state's economy. That tax cut alone would cost the state $384.9 million next year, and $770 million annually after that.

Rep. Matt Gaetz, the chairman of the House Finance & Tax Committee, praised the governor's overall tax cut plan, but he said he was looking for cuts that would "hit Main Street a lot harder."

Under the initial plan Gaetz outlined, the House would have four different sales tax holidays, including:

• a 10-day reduction for back-to-school shopping this August;

• a reduction on the taxes for hunting and fishing gear, including firearms, ammunition and fishing poles for one day in August;

• a reduction to encourage people to shop at small businesses on the Saturday after Thanksgiving;

• and a cut in sales taxes on technology, including computers, tablets and cellphones.

Those cuts would amount to $116 million in sales tax reductions next year. The House plan also includes reductions in taxes on commercial leases and continues a sales tax exemption on manufacturing equipment — ideas championed by Scott. In full, the House tax cut plan deals with 33 different taxes and would cost the state a total of $989 million, according to the House budget staff.

The Senate has not rolled out its tax cut plan yet, but the chief budget writer Thursday called the idea of a $1 billion tax cut "ridiculous" in the current financial situation. Senate Appropriations Chairman Tom Lee, R-Brandon, said he is wary of long-term tax reductions that could put future Legislatures in a bind should the economy sink. Lee said such a big tax cut plan was "laughable" even before state economists earlier this month released a new revenue forecast that shows the Legislature would have $400 million less to spend than previously expected. A big piece of that forecast has been a drop in corporate income taxes — the very thing Scott wants to cut more.

Despite the downgraded revenue forecast, Scott last week said the state still can afford his corporate income tax cuts. The fact that corporate income taxes are already are on the decline "should make them easier to cut, then," he said.

But Lee said signs of a softening economy demands that legislators resist handing out tax cuts just to do a political victory lap in an election year.

"We need to take a very cautious approach to all of this," Lee said.

Contact Jeremy Wallace at Follow @jeremyswallace.