State: McKay retreats on elimination of tax breaks

TALLAHASSEE -- With his tax plan in trouble, Senate President John McKay tried to silence critics Monday by offering to protect dozens of sales tax exemptions, including one for TV and radio broadcasters who are airing anti-tax ads.

McKay's willingness to safeguard tax breaks on everything from fertilizer to flags is the latest sign that his plan faces an uphill election year fight in the Capitol.

Some of the exemptions McKay is now willing to preserve are held by business groups that McKay has complained have been "feeding at the public trough for too long." The Senate president wants to lessen dependence on tourist taxes by reducing the sales tax from 6 percent to 4 percent and to broaden the tax base by eliminating many exemptions.

The voters would decide next November whether to put it in the state Constitution, along with a provision that makes it harder for the Legislature to raise taxes or create any new exemptions.

But McKay is on the defensive. The 2002 legislative session opens a week from today, and he faces heavy opposition from interests ably represented by lobbyists in the Capitol.

A few senators, including Republican Ginny Brown-Waite of Brooksville, have even asked whether existing exemptions for religious items or college tuition might vanish under the McKay proposal.

"What we're trying to do is listen to the criticism, and the positive suggestions that have been made," said Sen. Jack Latvala, R-Palm Harbor, who is working behind the scenes to fine-tune McKay's proposal. "We've basically tried to listen to people and move this bill in a direction that makes it stronger."

McKay is offering to keep existing sales tax exemptions for television, radio and newspaper advertising; school tuition, lunches and textbooks; agricultural products such as pesticides and feeds; religious items, including religious tapes for the blind; sales of U.S. and state flags; eyeglasses; nonprescription drugs; hospital meals and rooms; and volunteer firefighting equipment.

Preserving the exemption for livestock feed means one of Florida's most notorious tax breaks will remain untouched. That's the one for ostrich feed, a deal made years ago to a powerful Panhandle legislator who represented a few ostrich breeders.

McKay also wants rental car customers and hotel guests to keep paying a 6 percent sales tax, even if it goes down to 4 percent as a way of appeasing critics who say his plan is a windfall for out-of-state tourists.

McKay is even promising that food eaten by Seeing Eye dogs remains tax-free. A scathing video produced by the Florida Association of Broadcasters and circulated last week showed a blind man and suggested the McKay proposal would hurt the blind because most exemptions were at risk of being eliminated.

Critics said the move was predictable. They said it would not weaken their opposition.

"Everyone in the coalition knew there would be an effort to basically buy folks out of the plan," said Cory Tilley of the Coalition to Protect Florida's Economy, the umbrella group of opponents. "They're trying to put a good face on a bad plan. But our people still view it as a tax increase."

In recent weeks, bits and pieces of McKay's far-reaching proposal dribbled into public view, usually without McKay making any comment. Monday was no different.

McKay's concession came in a four-page news release by Senate Finance & Taxation Chairman Ken Pruitt, R-Port St. Lucie, a leading supporter of McKay's plan, that arrived in newsrooms after 6 p.m. Monday.

Pruitt's statement lists how nearly two dozen categories of transactions would be treated under the McKay plan. Those specifics will be in a bill that will be a companion to McKay's proposed constitutional amendment (SJR 938).

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Lucy Morgan

From the Times state desk