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House votes to repeal communications tax

The levy applies to equipment used by businesses, but has largely gone uncollected.

Published March 11, 2005

TALLAHASSEE - Florida businesses won a political victory Thursday when the state House voted unanimously to repeal a tax on communications equipment.

The 117-0 vote sends the bill to the Senate, which is expected to consider it in April.

"In my eyes, it's a very onerous tax that would tax a lot of little folks, and it would be a nightmare to collect that tax," said House Speaker Allan Bense, R-Panama City.

Bense made the bill (HB 49) the first substantive piece of legislation to reach the floor for a vote. Democrats, who usually oppose further tax cuts, joined the Republican majority in supporting repeal. Rick Kearney, who owns an information systems company and is president of IT Florida, said the tax would have put Florida businesses at a competitive disadvantage with their rivals in other states.

"This statute is an anomaly. It was created by accident. No other states have such a rule on the books," Kearney said.

The complex tax dates to the dawn of telecommunications deregulation in the 1980s. Known as the substitute communications tax, it applies to businesses that have their own systems of communications, such as networked computers, two-way radios and wireless dispatch systems.

The tax has been on the law books for years, but has largely gone uncollected. State revenue collectors have not yet sorted out a bureaucratic mechanism for collecting it.

Business groups have been lobbying for years to repeal the tax. Tampa and some other cities urged the state to be more aggressive in collecting the tax, a potential source of revenue for local governments.

Even a small business owner with five computers connected to a central router could be taxed under rules drafted by the Department of Revenue. The tax is on gross receipts similar to one that telephone and cable TV customers pay.

A legislative analysis estimates the tax would have generated about $400,000 in the first year with the state receiving $300,000 and local governments $100,000.

Florida TaxWatch estimated that full imposition of the tax would result in the collection of up to $500-million a year.

A previous repeal effort failed after a series of political trades between the House and Senate fell apart in the final hours of the 2004 session. The result frustrated railroads, banks, utilities and other repeal advocates.

Gov. Jeb Bush favors repeal, but Senate President Tom Lee, R-Brandon, voiced caution Thursday.

"I'm of the opinion that tax breaks are no different than spending. Both have to be considered within the context of the budget," Lee said.

Lee said he would wait until April, when state revenue experts reach a new estimate on how much money will be available to spend next year and what the demands are on spending before a final decision in tax cuts is made.

Times staff writer Lucy Morgan contributed to this report.

[Last modified March 11, 2005, 01:23:21]

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