State: GOP comes up with $1-billion in tax cuts

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GOP comes up with $1-billion in tax cuts

By PETER WALLSTEN

TALLAHASSEE -- Florida's Republican leaders will finally be able to brag that they handed out the biggest tax cut in state history, and they'll do it on Tax Day.

House and Senate leaders are expected to shake hands today on a $1.008-billion tax relief package sought by Gov. Jeb Bush. The package offers more help to businesses and wealthier Floridians than to the average taxpayer.

"The public hates April 15," said state Rep. George Albright, R-Ocala, chairman of the House Finance & Taxation Committee. "Everybody knows what it stands for. This will go down in history as the biggest peace dividend to the taxpayers of the state of Florida."

The tax relief still must be approved as part of Florida's $48-billion budget, which will require Bush's approval.

If the budget is approved, average Floridians would enjoy a rollback in property taxes -- about 42 cents for every $1,000 in assessed taxable value -- and would get to shop tax-free for clothes over nine days next fall.

Wealthy investors, businesses and elderly residents with money in the stock market would pay lower state taxes on their investments, and businesses would be in less danger of being audited by state tax officials.

Restaurants and bars would save money, thanks to a rollback of a per-drink tax on alcohol. And by the time the plan becomes law, a variety of businesses -- such as phosphate mining companies, advertising agencies and printers -- would likely enjoy new sales tax exemptions.

The details were worked out quietly in recent days and were announced at a meeting of Senate and House members late Wednesday. Leaders were working out minor kinks into the night Wednesday, but they planned to have everything set for an announcement today.

Though negotiations on some major issues in the Capitol are getting tense and emotional, the tax relief issue was easy and friendly. The Senate's lead negotiator, Orange Park Republican Sen. Jim Horne, is a roommate in Tallahassee with House Speaker John Thrasher.

It was not clear late Wednesday if Bush will agree to every aspect of the plan, although his budget staff has been involved in some of the negotiations. Donna Arduin, Bush's budget director, refused to comment on the tax relief plan.

The agreement does not include an idea Bush sold as a tax break for regular folks: a $50 rebate that would have been given to every utility customer in Florida. Bush had said he would fight for the rebate.

Republicans have made tax relief their mantra since winning control of state government last year, saying taxpayers should be rewarded for the state's booming economy and the state should do more to entice businesses.

With key elections on next year's ballot, the GOP is banking on the hope that tax relief will play well with voters.

But the notion of awarding $1-billion in tax breaks has drawn fire from teachers unions and Democrats who say the extra money should go for critical needs, such as schools and social services.

Opinion polls show voters might agree with Democrats, suggesting people care more about better schools and very little about taxes. Of the 50 states, Florida ranks 43rd in tax burden.

Still, the tax-cut plan won praise from business groups.

"This is the best plan I've ever seen for small businesses," said Bill Herrle, president of the National Federation of Independent Businesses' Florida chapter.

Dominic Calabro, president of the watchdog group Florida TaxWatch, said the tax relief could offer a small boost to the economy.

"It will help Florida's image as a place for young people and families and it encourages enterprise," Calabro said. "If the benefit (to average Floridians) is not direct, it's indirect."

House Speaker Thrasher, who originally proposed nearly $1.3-billion in tax cuts, said late Wednesday the final agreement sends a signal to the state.

"It says Republicans are true to their word, that the most important principles are less taxes and limited government," he said.

The tax package includes:

A nine-day sales-tax holiday, when Floridians can buy clothing and apparel worth up to $100 at a store without having to pay the statewide 6 percent sales tax. That means a shopper would save $6 on a $100 purchase. Shoppers can spend up to $100, tax free, at as many stores they want to, each day of the nine-day period.

A 6.4 percent rollback of property taxes.

A three-year rollback of the per-drink tax on alcoholic beverages, with the state losing $30.5-million in the first year and more than $100-million by the third year.

A reduction in the statute of limitations on state audits of individuals and businesses, from five years to three years, a change that will cost an estimated $59.9-million a year.

A reduction on the tax on investments, or "intangibles," from 2 mills to 1.5 mills, with the intent to eliminate the tax over four years. A mill is $1 of tax for every $1,000 of assessed, taxable value.

A reduction in unemployment taxes that businesses pay to fund benefits for the jobless. Employers would get a 0.5 percent break during 2000 and the unemployed would get a 5 percent increase in weekly benefits.

The House had proposed a rollback of school impact fees that would benefit 17 Florida counties, including Hillsborough. But the Senate did not agree to that, and the idea is likely to wind up in the hands of a study commission.

By Friday, the House and Senate should have agreement on a series of miscellaneous tax breaks that will total $40.9-million. The beneficiaries could include phosphate mining companies, advertising agencies, printing companies and others.

At one point, when lawmakers were discussing their taste for a plan to help the stone crab industry, Horne suggested some were going out of their way to help.

"Thank goodness we don't tax prostitution," he said.

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