Perspective: State Tax Reform Task Force could use some luck

TALLAHASSEE -- Sixteen important people who have better things to do with their time than waste it embarked the other day on what many others figure to be a fool's errand: a two-year study of Florida's tax structure.

Their collective title, the State Tax Reform Task Force, is indicative of why they might more profitably study Morse code. It has been 51 years since banking, timber, utilities, phosphate and other lobbies beat Gov. Fuller Warren's attempt to tax them, forcing Florida to adopt a sales tax instead. The rate has since doubled, but only once has it been reformed. That was when Gov. Reubin Askew fulfilled his 1970 campaign promise to tax corporate profits and repeal the sales tax on household utilities and most residential rents.

Seventeen years later, Gov. Bob Martinez -- a Republican -- persuaded legislators to broaden the sales tax and make it fairer by taxing services, too, but they botched the job and repealed it under pressure from the advertising media and other special interests. That not only made a one-term governor of Martinez but poisoned the tax reform well so thoroughly that Lawton Chiles couldn't lead even Democratic legislators back to it.

And now Florida has a governor who spells reform r-e-p-e-a-l, along with the most conservative, pro-business legislature since Fuller Warren's. Tax reform appears to be as far out as the Comet Kohoutek.

So what explains a solid conservative like Sen. Jim Horne, R-Orange Park, passing a bill to create a tax reform task force? Why are he and Senate president-designate John McKay giving their time to it? Why are lobbyists taking it seriously enough to begin currying members and showing up for their meetings?

Because there's a job to be done. The sales tax could be lower if there were fewer exemptions. Smart business people want and need equal treatment. And, of course, good times do not last forever. Recessions happen; the last one put schools in a hole from which they've never quite climbed out.

As Horne points out, the time to reform taxes is when you don't have to.

If litigation ever bankrupts the tobacco industry, Florida loses $400-million a year in settlement money that it's spending on social services. If Congress repeals the estate tax, Florida eventually loses more than $800-million a year, which it presently collects as a credit against that tax. Scratch what's left of the intangibles tax, as Bush and the Legislature mean to do, and another $508-million goes.

The biggest of all the black holes is spelled I-n-t-e-r-n-e-t. As it grows, putting more and more sales online where the states can't tax them, experts say Florida could lose as much as $700-million a year in present revenue by 2003.

"There is a revolution going on in the way we do business in this country," McKay, a shopping center developer, told the task force Wednesday. "There will be plenty of dark space in regional malls." With that, he warned, property values would fall and property tax receipts with them.

The states need Congress' permission to tax most Internet sales, or conventional mail orders, for that matter. Horne and McKay see a better chance if the tax rate were lower, which would reduce the noncomplying e-retailers' competitive advantage over Florida merchants. Lowering the rate, to perhaps 3 percent from 6, could be had by repealing some of the 159 sales tax exemptions, worth $4.3-billion, that Horne's Fiscal Resources Committee has singled out for consideration. (Food, medicine and most other necessities remain off the table.)

Previous efforts have failed, Horne reasons, because "tax reform has always been a code for tax increases." Not this time, he says. Whatever the task force recommends will be revenue-neutral. And what better time to do that than when the state isn't in crisis and isn't desperate for money?

Business has a huge stake in tax reform, as the Chamber of Commerce tried to tell the Legislature 10 years ago, but many specific businesses prefer the exemptions they've got to the future they don't know. Several business lobbyists serve on the task force, though not as many as on the last Tax and Budget Reform Commission, and if they can see past the trees, they could improve the forest.

The panel's larger problem may be ideological. A couple of members appointed by the governor and House speaker have already served notice they want to make taxes harder to pass. But nothing in Horne's bill authorizes the task force to undertake that.

To Horne's credit, the bill does call for findings many politicians may not want to hear -- as, for example, whether Florida's taxes are "proportional or progressive" among various income groups. Truth is, they're neither. Citizens for Tax Justice has ranked Florida as the third most regressive state, because the poorest families pay three times as much of their income in state taxes as the wealthiest do.

Horne knows that some people would be happy to see the task force fail, as even more expect it to. But, says he, "I know in my heart it's the right thing to do."

Indeed it is. Wish them luck. They'll need lots of it.

Back to Perspective

Contact the Times | Privacy Policy
Standard of Accuracy | Terms, Conditions & Copyright

From the Times
Opinion page