Florida Taxation & Budget Reform Commission April 14 Meeting Materials and Remarks by Senator Haridopolos

Apr 15, 2008

The Florida Taxation and Budget Reform Commission held a meeting on Monday, April 14, 2008.

The meeting included the presentation of the following proposals (click on the links to access each proposal and its respective analysis)

Senate Finance and Tax Chairman Mike Haridopolos addressed the Taxation and Budget Reform Commission during the meeting. The text of his address is below.

***

Thank you Mr. Chairman for the time to speak and the willingness of the commissioners to listen.

The Taxation and Budget Reform Committee is given an opportunity every 20 years to make NON-political, long term changes in our states tax code.  In many ways it is a once in a generation chance to reform our tax code so that our state may continue to flourish.  I trust each of us took part in the process to ensure that our children are blessed with the opportunities we were given.

Now after almost a year, the commission was presented with a very seductive plan.  That plan presented for a vote on March 17 was one which all Floridians would be likely to support.  “Cut property taxes by up to 30%, fully fund our public schools, grow the economy…and do it all for a penny!”

It sounded great.  The $8 billion in property tax cuts would be made up by simply charging one penny extra in sales taxes for ½ the money and by eliminating exemptions for the other $4 billion.  The way it was presented by the proponents of the plan…it seemed as if the money was in the bank.

But since that vote on the 17th of March the analysis, first done by your selected and respected economist paid for by tax payer dollars and later our Senate staff clearly show the numbers don’t add up. 

The elimination of the sales tax exemptions will not generate the $4 billion dollars necessary to hold education harmless.  Since the numbers don’t add up it will require new and higher taxes…In fact the largest tax increase in Florida history.

Why don’t the numbers add up? 

Because the exemptions listed most often by critics add up to just over $4 million dollars.  Eliminate ostrich feed, luxury sky boxes, Super Bowl tickets, dirt fill, fish farms and opera tickets and you are only one-one thousandth of the way there.  You still need to find $3,995,500,000.00 to make your numbers work. 

Not a single member of the commission sent a reply to our letters to such a fundamental question as to “where’s the money.”  If the money is there, why would an un-elected, non-political body fail to respond to such a fundamental question? 

In our second letter to the commission we clearly showed that the four largest exemptions (car trade-ins, government purchases, water and energy) which make up $1.6 billion (33% of the $4 billion) are unlikely to be eliminated. 

We read consistently in news reports that when pressed fellow commissioners have stated that is it unlikely to get anywhere near that $4 billion number.  So if you don’t get the money from exemptions where would you get the money? 

Unless it is of course it is the intention of this commission to force the creation a state income tax?

We do respect the fact that one commission let it be known clearly on Thursday April 10 in the last Styling and Drafting committee meeting that a services tax is the way to secure the necessary dollars to meet the mandated spending requirements found in this plan.

That said we all know two prior attempts to make a new tax on services proved to be an abject failure.  First in 1987 under a Democrat legislature and then in 2002 under the Republicans, an attempt was made to force new taxes on non-taxed items.  In both cases Floridians clearly said NO to higher taxes.

Commissioners we wrote these letters so seek answers to fundamental questions.  Since we did not receive a single response we offer two suggestions.  You can offer to the voters Speaker Rubio’s first idea to raise the sales tax by 2.7 cents in exchange for an elimination of the RLE.  While controversial at least that offer is intellectually honest and justified by budget numbers. 

Or your second option is to tell voters that ALL tax exemptions (not identified as exempt in your current amendment) are now subject to taxation. 

Finally, we are the Sunshine State.  The Senate along with other citizens have asked that more testimony be taken here in Tallahassee from people across the state about how the proposed change might affect our state.  Since those requests have gone unanswered by the commission we in the Florida Senate will hold hearings Friday.  We feel citizens of our state deserve to know how this amendment will affect their lives.   

I thank you for your time and your willingness to listen.

 

Florida Chief Financial Officer Alex Sink also addressed the Commission.  News coverage of her appearance and the meeting from the Tallahassee Democrat is below:

 

Article published Apr 15, 2008

CAPITOL NEWS

Commission rejects limiting Florida tax revenues
Proposal paving way for Internet sales tax gets OK

By Bill Cotterell
FLORIDA CAPITAL BUREAU POLITICAL EDITOR

A powerful tax commission Monday rejected a proposal to limit state and local tax revenues.

But the Taxation and Budget Reform Commission did approve a proposal that might end up with Floridians paying a sales tax on things they buy over the Internet or from home-shopping channels.

The commission’s failure to put the “taxpayers bill of rights” idea up for a statewide referendum doesn’t mean the idea for putting a lid on growth rates for government revenue is dead. The House Policy and Budget Council is scheduled to consider a proposal today to do legislatively what the commission fell short of doing.

“Today we are not going to give our citizens a chance to restrain government — not choke government, but restrain government,” said Mike Hogan, the Duval County tax collector who sponsored the tax-limitation proposal. It would have imposed a formula based on population growth, inflation, plus 1 percent on revenue growth in state and local governments.

Before the vote, with rejection all but certain, the commission substituted language requiring a two-thirds vote on new taxes, rather than a hard cap. After adopting that amendment, the panel voted 14-9 on the proposal itself — three votes shy of the super-majority needed for adoption.

House budget boss Ray Sansom, R-Destin, said the tax cap won’t go away. His House Policy and Budget Council has a proposal (HB 7125) on its agenda today to accomplish the same thing.

“Ultimately, the Legislature makes these kinds of decisions,” said Sansom said Monday.

Chief Financial Officer Alex Sink warned the tax commission that the tax cap might backfire by costing billions in higher interest rates on government bonds. In a brief morning appearance at the meeting, Sink said the state figures to borrow $12 billion in the next 10 years, while cities and counties might issue about $200 billion in bond issues, and that even more bonding would be necessary if a major hurricane hits a big population area.

Sink said bond markets get nervous when governments cap their revenue-growth potential. If Florida bonds are downgraded, she said, it could cost state and local governments billions of dollars in higher interest rates.

The tax commission will meet April 24-25 to finalize its already-adopted recommendations. It may schedule a meeting before then to act on some proposals that did not reach a vote Monday.

The “remote” sales tax idea has been pursued for many years by Florida businesses, who feel they are at a disadvantage because they have to collect the 6 percent statewide sales tax that out-of-state companies don’t bother with. Commission member Randy Miller, a lobbyist for the Florida Retail Federation, sponsored the proposal for Florida to join 22 states in a multi-state pact to collect sales taxes on Internet, mail-order and sales by phone.

“This is a no-brainer,” said Miller. “We’re treating out-of-state companies better than our won residents. It is fundamentally unfair.”

The commission voted 17-6 for his proposal, giving it just enough votesto make the ballot.

If approved by voters, the proposal would require the Legislature to join the interstate pact. It would still require action by Congress to make “remote vendors” remit the sales tax to states where they don’t have a business operation, Miller said.

 

 

News Library

RSS Subscribe

Get Our Latest News In Your Email