TALLAHASSEE The head of a group representing small Florida businesses opposed the House Republican leadership’s plan to exchange lower property taxes for a higher sales tax, in testimony Thursday before the Senate Finance and Tax Committee.
Members of the National Federation of Independent Business are worried that such a swap, while providing short-term property tax reductions, would lead to higher levies on commercial property, NFIB state director Allen Douglas said.
House GOP leaders on Wednesday unveiled a two-part plan that includes a proposed state constitutional amendment that would abolish taxes on homestead property — primary homes — while increasing the state’s sales tax from 6 percent to 8.5 percent. The increase would go to local governments to partly offset property tax losses.
The proposed amendment would also limit state and local revenue increases to a factor equal to population growth and inflation, starting from 2000-01 budget figures. That cap is expected to also result in significant savings for owners of second homes, rental and commercial property.
Local government bodies, though, would be able to exceed the cap by unanimous vote.
“Over the long term, as local governments need revenues, simply with a unanimous vote they could get around the revenue caps and begin to tax businesses more and more,” Douglas said.
His members, instead, favor Republican Gov. Charlie Crist’s proposal to place a 3 percent cap on annual tax increases for commercial and other non-homestead properties similar to the ceiling provided for homeowners under the Save Our Homes Amendment.
That endorsement came with a caveat, though.
“We do have the concern, however, that in the future years that would cause inequities among businesses,” Douglas said.
That’s what has happened with the Save Our Homes amendment. It has resulted in new homeowners and owners of second homes paying taxes much higher than those of Floridians who have occupied their primary homes for many years.
Sen. Ted Deutch, D-Boca Raton, suggested that abolishing taxes on homesteads under the amendment proposed by House Republicans would exacerbate the differences, particularly for “snowbirds” from northern climes who buy second homes to winter in Florida.
Deutch raised the issue in a question to Penny Herman, chairwoman of the Florida Association of Realtors’ tax study committee.
“We’ve been hearing from our Realtors in South Florida, this has definitely been an issue with their clients,” Herman said. “Snowbirds, as we call them, are more alarmed and they are speaking louder.”
Herman, a former Tallahassee mayor, said she couldn’t speak for the association on the House plan. Association lobbyist Trey Price said only that Realtors were intrigued by it.
The Senate committee has not yet drafted a tax reform plan. It will wait until after a series of public hearings around the state are completed, said its chairman, Sen. Mike Haridolopos, R-Melbourne.
Haridolopos said the goal is to lower property taxes that have jumped in the past couple years largely because of climbing property values. That has caused an outcry for reform and lawmakers have been peppered with a variety of proposals, although the House Republicans’ plan is the boldest advanced so far.
It would cut local government spending by almost $5.8 billion either through passage of the proposed amendment or a state law. The law would include the local government revenue cap but would not increase the sales tax nor abolish property tax on homesteads.