Florida Insurance Premium Tax Credit Bill to Offset Motor Vehicle Registration Fees Gets Unanimous Senate Committee Approval
Mar 28, 2013
A proposal to eliminate a credit that insurance companies can take against their premium tax liability of up to 15 percent of salaries paid to employees located or based within Florida was part of the Senate Committee on Appropriations meeting agenda this morning, March 28, 2013. Considered to be an economic development incentive, the credit has been in effect since 1987.
Committee Chairman Joe Negron, also the sponsor of the proposal, SPB 7132, explained that the bill would also reduce motor vehicle registration fees, which were increased substantially in 2009 to provide additional state revenue. The gain in revenue by eliminating the longstanding premium tax credit would be approximately offset by loss of state revenue on motor vehicle registration fees, he said.
Numerous business and insurance groups testified in opposition of the proposal, with speakers arguing that this tax credit is an incentive for businesses to domicile in Florida. Further, as it stands, they said, the incentive makes Florida’s business climate competitive with that of other states, whereas the proposal discourages job creation and growth.
Calling the credit a “tax exemption,” Senators John Thrasher and Jack Latvala asked for a list of companies that have come to Florida because of it. Senator Latvala asked whether the exemption should be carried out to other business. Opponents of the proposal are in the process of gathering this data, it was noted.
Senator Andy Gardiner pointed out that, as an incentive, the tax credit did what it was intended to do, and it’s time to “move on.” He added that he welcomes debate and discussion on this issue.
Senator Garrett Richter, however, called the proposal a “tax increase” on the insurance industry and urged Senators to move carefully on the issue. He also noted the “good news” that the insurance industry has created 44,000 new jobs since 2008, despite the depressed economy.
Senators Thrasher and Tom Lee opined that this type of “exercise” is exactly what the Legislature should consider in order to do what is in Florida’s best interests.
Senator Eleanor Sobel said she supports the proposal because it would give Florida drivers a tax break.
Senator Chris Smith commented that more information and a more comprehensive review of tax policy is needed.
SPB 7132 passed unanimously and will be filed as a committee bill.
Although the Legislature’s Revenue Estimating Conference has not yet considered the fiscal impact of SPB 7132, Legislative staff estimates that the reduced motor vehicle fees will decrease revenues to Florida’s General Revenue Fund by approximately $225 million on a recurring basis. The repeal of the insurance premium tax credit, on the other hand, is expected to increase State revenues by at least $220 million on a recurring basis.
The current insurance premium tax forecast assumes salary credits taken for the 2012 insurance premium tax year will equal $230.1 million.
To view a comprehensive analysis of SPB 7132, click here. To view complete bill information, click here.
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