Tensions mount in tax debate
By STEVE BOUSQUET, Times Tallahassee Deputy Bureau Chief
TALLAHASSEE -- From haircuts to overnight mail, nearly 100 services in Florida would be taxed under a bold and controversial Senate plan to broaden Florida's tax base.
Thursday's release of the long-awaited list of services that would lose their valuable tax exemption only heightened the tensions between the plan's chief architect, Senate President John McKay of Bradenton, and his opponents.
McKay used his powerful pulpit to accuse his enemies of spreading "lies" in the Capitol corridors and on TV, while accountants and broadcasters said he is hoodwinking the public by disguising tax increases as tax reform.
McKay moved to ease fears by making public the services that he and his economic experts say should be taxed, and an even longer list of items that would remain tax-free, such as advertising, insurance premiums and real estate commissions. His bill would give voters the final say in a Constitutional referendum in November.
"All the cards are on top of the table. Everybody knows what's happening," McKay said. "That's what the people of Florida deserve."
At the same time, the Florida Association of Broadcasters launched a second wave of TV ads targeting 14 senators, including three from the Tampa Bay area, who support McKay's proposal.
The ads falsely accuse lawmakers of trying to tax day care services, long distance phone calls, interest on mortgages, insurance premiums, "even your funeral." None would be taxed under McKay's plan.
"If that isn't dishonest, I don't know what is," McKay said.
The author of the ads defends them, noting that McKay's list of services to be taxed and untaxed is a starting point for the Legislature. Lawmakers, not voters, will decide what is tax-exempt and what isn't, and they have until July 1, 2004, to do it.
"I stand by the ads," said lobbyist Pat Roberts of the Florida Association of Broadcasters. "If he truly believes tax law should be in the Constitution, then let him list all of the exemptions in the Constitution."
An influential business group joined the opposition.
The Florida Chamber of Commerce, which has issued a series of reports on the state's shortcomings in education and skilled workers, said it opposes "constitutionally mandated taxes." Instead, it wants a commission to study the issue.
McKay blasted the Chamber's "politically expedient" response and "the height of hypocrisy, particularly when the chamber's research showed the state "will face significant challenges' in meeting its needs."
McKay also noted he formed a study commission on taxes two years ago.
McKay continues to win converts in the Senate. Twenty-six of 40 senators -- two more than is needed to pass a constitutional amendment -- are cosponsoring the bill. The lone Tampa Bay area holdout is Jim Sebesta, R-St. Petersburg, who said he will likely add his support.
The big test comes in the House, where Speaker Tom Feeney is openly dubious of McKay's tax ideas and a traveling House committee opens hearings today in Tampa and Orlando.
Feeney, testifying Thursday before another House tax panel, questioned McKay's claim that the plan would not raise taxes, saying a lower rate and a tax on services used more by Florida residents than tourists might increase the taxes Floridians pay.
Under McKay's proposal, the items that would be taxed would produce $4.2-billion a year if the sales tax rate is cut from 6 percent to 4.5 percent on most items. Tourists still would pay 6 percent on rental cars and hotel rooms, a change McKay made in response to criticism that visitors would get a tax break.
Gone from McKay's tax plan are eliminating the intangibles tax on stocks and bonds, a high priority of Gov. Jeb Bush, and repealing a liquor-by-the-drink tax that is a top priority of the politically influential Florida Restaurant Association.
McKay took the unusual step of inviting reporters to preview the new round of attack ads, scheduled to begin airing today. McKay pleaded for help. "This dishonesty has to stop, and you all need to stop the dishonesty," McKay told reporters. "It's wrong."
The targets of the 10- and 30-second ads include Sens. Tom Lee, R-Brandon, Les Miller, D-Tampa, and Ginny Brown-Waite, R-Brooksville.
"This really is a sad commentary that the media, the broadcasters, have sunk so low," Brown-Waite said. "People should rethink watching stations that promote these lies."
Said Roberts, the TV lobbyist and ads creator: "She needs to go home and listen to the voters -- and maybe she'll get that chance in November."
McKay said his plan seeks to avoid putting Florida businesses at a risk of losing market share to competitors in other states.
Defending the idea of taxing haircuts, he said: "If one barber is going to charge 41/2 percent, every other barber is going to have to charge 41/2 percent. You're not going to drive to Thomasville, Ga., to get a haircut."
Still, accountants have repeatedly said they would lose clients to firms in other states that don't charge a tax on accounting services. The Florida Institute of CPAs remains among McKay's fiercest critics.
"These are new taxes that are going to generate substantially more revenue and they're being sold as tax reform," said Lloyd "Buddy" Turman, president of the group. "If your ultimate goal is to get more revenue for the state of Florida, let's call these things what they are. They're new taxes, or tax increases."
-- Times staff writer Lucy Morgan contributed to this report.
In his words
Excerpt from Senate President John McKay's remarks to the Senate on Thursday:
"There is a considerable amount of misinformation and disinformation regarding this issue in the halls. One of the rumors that has been circulating in the effort to intimidate is that there are only seven votes for this issue. Sen. Pruitt just told you that three-fifths of this Senate, because of his hard efforts, have now cosponsored this bill. There will be a very good future for this resolution. . . . I'm getting a little tired of the falsehoods and I think the rest of you are, too."
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