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State property taxes would be cut up to 40 percent by ending some exemptions and taxing services.
By STEVE BOUSQUET, Tallahassee Bureau Chief
Published January 18, 2008
TALLAHASSEE - Despite strong opposition from businesses, a powerful tax panel Thursday supported a historic tax shift, potentially saving homeowners billions of dollars a year by taxing services.
A plan advanced by a committee of the Taxation & Budget Reform Commission would cut property taxes by as much as 40 percent, the share that pays for public schools, which is $8-billion this year.
In return, the Legislature, which sets the school property tax rate, would have to close some sales tax exemptions and tax some services that are now tax-free. That could include legal and accounting services, dry cleaning and charter fishing trips.
It marked the first time in years that any state body has gone on record as favoring elimination of sales tax exemptions or taxing services.
The 1987 Legislature repealed a broad services tax six months after adopting it, amid overwhelming business opposition.
Thursday's 7-3 vote was one step in a long, politically charged process, and voters would have to approve the plan in November if the full 25-member commission supports it, which is questionable.
Three members who voted yes voiced reservations about parts of it, suggesting trouble later on. However, they said the subject was too important to reject so quickly.
The latest proposal is sponsored by former Senate President John McKay of Bradenton, a longtime crusader for eliminating tax breaks, and St. Petersburg lawyer Darryl Rouson. McKay is seeking to broaden support for his proposal by repackaging it as a huge property tax break at a time when the tax is the focus of public ire all over the state.
"Floridians believe that property taxes are becoming a huge burden for them," McKay said. "The legacy of this commission is going to be what we do about property taxes."
University of Florida economist David Denslow said that sales taxes are a more stable source of revenue than property taxes, and that an estimated 20 percent of sales taxes collected in Florida are paid by tourists, another tax savings for residents.
Opponents representing real estate agents, accountants, architects, retailers, growers and others said they support a review of tax exemptions but oppose mandatory elimination of them. McKay's plan, they argue, would create volatility for the business community, which already pays more taxes than in most other states.
"You don't know what it is you're going to be taxing," said Florida Chamber of Commerce attorney Vicki Weber.
Critics said taxing services would make tax collections more complicated and hurt Florida's competitive standing. Printers, for example, would hire subcontractors in other states that don't tax services, they said.
"You're going to lose one of the biggest industries in this state and one of the biggest employers," said Gene Adams, speaking for the Coalition to Protect Florida's Economy.
McKay said opponents were using a "Chicken Little" strategy and misinformation to undermine his efforts, and he quoted a respected state economist, Amy Baker, who cited a demographic trend showing Florida is getting older and poorer.
"The property tax is a very poor vehicle for funding Florida's future," McKay said.
To read the proposal, go to www.floridatbrc.org.
The commission's Finance & Taxation Committee will debate the proposal at a hearing on Feb. 11 in Tallahassee. If that committee votes for it, it then goes to the full 25-member commission. Two-thirds of its members, or 17, must vote yes for the proposal to get it to the November ballot.
How they voted
How the Taxation & Budget Reform Commission's Government Procedures and Services and Committee voted Thursday on a proposal to reduce property taxes and increase taxes on businesses and services, subject to voter approval.
Yes: Mike Hogan, Julia Johnson, Carlos Lacasa, Patricia Levesque, Alan Levine, Greg Turbeville, Ken Wilkinson.
No: Jacinta Mathis, Nancy Riley, Brian Yablonski.
An eighth "yes" vote was not cast by Darryl Rouson, proposal co-sponsor, who briefly left the room.
[Last modified January 17, 2008, 23:14:41]