The Florida House’s proposed $91.3 billion fiscal year 2021 budget includes a tentative $100.3 million tax relief package that reduces the state’s communications service tax (CST) and the business rental tax (BRT).
The House Ways & Means Committee got its first look Tuesday at the chamber’s tax proposals, which also include back-to-school and hurricane preparation sales tax holidays, a one-third slash in commercial aviation fuel gas taxes, modifications in local option sales tax levies requiring school districts to share revenues with charter schools, and a proposal to allow tourist development taxes to be used for water quality projects.
The 89-page tax package is similar to the Senate’s still evolving tax package but falls far below the $312 million tax-cut package outlined in Gov. Ron DeSantis’ fiscal 2021 budget request.
Ways & Means Chairman Bryan Avila, R-Hialeah, introduced the package, noting its contents would be discussed “at great length” in ensuing meetings and acknowledged some of the proposed cuts may not meet expectations.
“We are trying to live within our means with the tax package,” Avila said. “I am certainly proud of this product in terms of how many things we are trying to accomplish. It is a good foundation for moving forward.”
Among tax-relief measures in the proposed package:
Commercial property rent, or business rental tax (BRT), reduced from 5.5 percent to 5.4 percent: Florida is the only state that levies a BRT on commercial leases. In 2019, the state’s Department of Revenue estimated 150,000 businesses paid $2 billion in BRT. In 2018, the levy was trimmed to 5.7 percent, and, in 2019, it was scaled back to 5.5 percent.
“I’d like to see in the future – next year or soon thereafter – an exemption for small business,” said Rep. Mike Caruso, R-Boca Raton, noting small businesses are struggling to compete with online businesses that don’t pay property taxes.
“When we slash the BRT, we help our small- and low-income families to start a business,” said Rep. Al Jacquet, D-West Palm. “I would like to see us eliminate it at some point because we are going to see a return on that investment” by creating more job-generating businesses.
Half-a-percent decrease in the communications service tax (CST): The House tax-relief package calls for reducing the state’s general CST from 4.92 percent to 4.42 percent and the state’s CST on direct-to-home satellite services from 9.07 percent to 8.57 percent, beginning Jan. 1, 2021. Local CSTs vary by jurisdiction. The maximum rate is 5.1 percent.
Florida CSTs, among the nation’s highest, are imposed on sales of communication services, including wireline and mobile telecommunications service, cable and video service and direct-to-home satellite service.
“Obviously,” Avila said, “every single resident who has a cell phone is impacted by” the CST and will benefit from the tax cut.
Tt won’t benefit residents enough, however, several members said.
“I’d like to see (the tax cut) increase,” said Rep. Charlie Stone, R-Ocala, estimating 20 million phones are assessed Florida’s CST. “The entire CST needs to be revamped.”
“We should take a deeper look at that and see if we could slash it more,” Jacquet said.
Back to-school and hurricane preparation sales tax holidays: The House package scales back this year’s five-day back-to-school tax holiday to three days – Aug. 7-9 – and retains a seven-day disaster prep tax holiday, scheduled for May 29-June 4.
The back-to-school tax holiday exempts from state sales taxes items that cost $60 or less, such as clothing, footwear, backpacks and school supplies. It also exempts the first $1,000 of the sales price of personal computers and related accessories purchased for noncommercial home or personal use.
Florida has enacted a back-to-school sales tax holidays 18 times since 1998. They have varied from three to 10 days.
“Why don’t we stick to a set number of days and stop moving it around every year – Three days or five days? Five days or three days? – so families can plan?” asked Rep. Dianne Hart, D-Tampa.
The seven-day disaster preparedness holiday allows residents to purchase items in the state’s Division of Emergency Management’s disaster supply kit, including battery operated radios, flashlights, batteries, first-aid kits, tarpaulins, coolers and generators.