Lawmakers are reviewing further cuts to the state lease tax, already slated for a reduction from 4.5% to 2% in June. The tax reduction is one of Florida Realtors’ legislative priorities.
TALLAHASSEE, Fla. – With business groups long saying the tax should be scrapped, state lawmakers could look at further reducing a tax on commercial leases.
The House Ways & Means Committee on Thursday reviewed tax-cut “concepts,” including a possible reduction in the lease tax, as the House and Senate prepare in the coming weeks to negotiate a tax package.
But committee Chairman Stan McClain, R-Ocala, agreed with Senate Appropriations Chairman Doug Broxson’s assessment that the final tax-cut package won’t reach a $1.3 billion total in the current fiscal year.
“It won’t be as robust,” McClain said after the committee meeting when asked a question using the same phrase.
McClain said his committee will roll out a proposal next week that could include shorter sales-tax “holidays” than in the current fiscal year, when the state offered two 14-day tax holidays for back-to-school items, two 14-day tax holidays for disaster-preparedness supplies, a three-month tax holiday for recreational items and activities and a seven-day tax holiday for such things as tools. During tax holidays, consumers do not have to pay sales taxes on purchases.
“All of that’s in play,” McClain said. “Again, we have a certain amount of money that we think we can use for tax packaging.”
McClain didn’t say what the overall amount could be.
House and Senate leaders will negotiate a budget for the 2024-2025 fiscal year and a linked tax package before the scheduled March 8 end of the annual legislative session.
On Wednesday, Broxson, R-Gulf Breeze, said the final budget will include paying off debt and socking away record reserves but probably will result in tax holidays that are “more restricted than last year.”
McClain’s committee on Thursday looked at several proposals, including making a deeper cut in the commercial-lease tax, which is expected to go from 4.5% to 2% in June.
A 1 percentage point reduction would cut revenue to the state by about $360 million a year, McClain said.
The reduction to 2% is part of a 2021 legislative deal that included collecting sales taxes from out-of-state retailers on purchases made by Floridians and replenishing a state unemployment trust fund depleted after the economy took a massive hit early in the COVID-19 pandemic. The deal allowed cutting the commercial-lease tax when the unemployment fund was replenished. The trust fund is expected to hit a pre-pandemic benchmark of $4 billion in March.
The state has imposed the commercial-lease tax since 1969, and business groups have sought for years to whittle the rate.
As an interim step during the 2023 session, lawmakers reduced the tax from 5.5% to 4.5% on July 1, the start of the current fiscal year.
Meanwhile, the House committee also looked Thursday at limiting the number of years local tourist-development taxes could be imposed and providing up to $10,000 in credits against corporate income taxes for companies that employ people with disabilities.
Rep. Anna Eskamani, D-Orlando, said she’d like the credits to also apply to small businesses. Depending on the way they are legally structured, small businesses might not pay corporate income taxes.
“Right now, I think Publix and Disney would be the biggest beneficiaries,” Eskamani said. “And I just feel like it would be awesome to incentivize small businesses to benefit too.”
The credits were part of tax proposals from Gov. Ron DeSantis.
McClain said his committee is still considering a $409 million DeSantis proposal to provide a one-year exemption on certain taxes, fees and assessments on property-insurance policies for homes up to $750,000.
Overall, DeSantis recommended $1.1 billion in tax breaks for next fiscal year, including six sales-tax holidays similar to the current year. The governor’s proposal also called for $22 million in savings through an exemption on insurance premium taxes on flood-insurance policies and to permanently eliminate sales taxes on over-the-counter pet medications, projected to save $37 million.
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Author: amyc