TALLAHASSEE (CBSMiami/NSF) – Florida businesses would get a second massive benefit as lawmakers move toward requiring out-of-state retailers to collect sales taxes on purchases made by Floridians, under a deal announced Monday by House and Senate leaders.
The House Commerce Committee backed a measure (HB 15) on Monday that would require out-of-state retailers to collect and remit the sales taxes, with the anticipated $1 billion a year in revenue now proposed to go toward replenishing the state’s Unemployment Compensation Trust Fund and to subsequently make a major cut in a tax on commercial rent.
The commercial rent tax, long a target of business lobbying groups, was added to the House proposal Monday. The Senate last week passed a version (SB 50) that required the additional money to go to the unemployment fund, which has been depleted during the COVID-19 pandemic.
Proposals in past years to require out-of-state retailers to collect sales taxes have failed because of concerns that it could be viewed as a tax increase on Florida consumers. However, House Commerce Committee Chairman Blaise Ingoglia, R-Spring Hill, said the amended bill can be viewed as a $1 billion tax cut.
“Since we’re taking the money and we’re offsetting and we’re giving it back in forms of tax cuts, it doesn’t grow government, it’s meant to grow the economy,” Ingoglia said.
The prospects for the latest attempt to collect the tax money improved initially because lawmakers at the end of 2020 faced a revenue shortfall stemming from pandemic-related economic woes. Since then, the revenue situation has steadily improved and the state expects to receive an influx of about $10 billion in federal stimulus money.
The Senate on Thursday voted 30-10 on its version of the sales-tax proposal (SB 50), which was linked to an earlier agreement between Senate President Wilton Simpson and House Speaker Chris Sprowls to use the money to replenish the unemployment trust fund.
As the House committee voted Monday to advance its version of the bill, Simpson and Sprowls announced the additional sales-tax money also would bring down the commercial rent tax from 5.5 percent to 2 percent after the unemployment trust fund is replenished.
A joint news release from the two leaders said sales tax revenue that would otherwise go into the general fund will instead be used to reduce the rent tax.
“In addition to saving Florida businesses from a 700 percent increase in unemployment taxes over the next four years, our revised legislation will now do even more for the small business community — offer relief from our state’s commercial rent tax,” Sprowls, R-Palm Harbor, said in a statement. “Our update gets government out of the way of the entrepreneur, from the car mechanic down the street to your favorite local pizza place owner, and helps ensure that they can stay open for business.”
Simpson, R-Trilby, said the amended proposal will “lead to thousands of new high-wage jobs for Floridians.”
Economists have estimated that the proposal to require out-of-state retailers to collect sales taxes could generate $973.6 million in the upcoming 2021-2022 fiscal year and $1.08 billion in each following year, according to the House and Senate.
Supporters of the change point to a 2018 U.S. Supreme Court decision in a case known as South Dakota v. Wayfair, a large online retailer. The court ruled against Wayfair, overturning a “physical presence test” and expanding states’ abilities to collect sales taxes from remote retailers.
Democrats in Monday’s committee meeting were unable to change the bill to address state unemployment benefits, which at $275 a week are among the lowest in the nation. However, they supported the overall proposal.
“This amendment is only supporting small business owners and the amendments that I offered up previously would have supported workers,” said Rep. Angie Nixon, a Jacksonville Democrat who noted she is a small business owner. “I just want to put that on record.”
If the revised bill is approved by the full House, it would need to go to the Senate for a final vote.
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