To create a tax break for the Miami Dolphins, Florida might eliminate a tax break for Miami’s foreign banks.
On Thursday, the state Senate is scheduled to vote on a bill allowing Florida to pay out $15 million a year in sales-tax rebates for stadium renovations, including a possible $3 million yearly subsidy for the Dolphins’ Sun Life Stadium. To pay for the new stadium dollars, the legislation would end a tax deduction reserved for international banking operations, which in Florida are clustered in the Miami area.
The deduction dates back to the 1980s and costs Florida about $14 million a year in lost tax revenue, according to a Senate analysis. The targeted deduction involves arcane rules of global finance and banking regulation, making the issue an easy one to miss amid the heated argument over whether to invest public dollars in professional sports facilities.
“Which one is sexier: Super Bowls in Miami or international banking?” said David Schwartz, president of the Miami-based Florida International Bankers Association.
In a debate about the stadium plan Wednesday between auto magnate Norman Braman and the Dolphins’ campaign leader, lawyer and community activist H.T. Smith, the banking provision didn’t come up. Instead, the two argued over whether a $350 million upgrade to Sun Life would boost the economy enough to warrant tax dollars. Voters are slated to decide the issue in a May 14 referendum.
“We are a tourist economy,’’ Braman told the Downtown Bay Forum luncheon about the plan to raise a Miami-Dade hotel tax to 7 percent from 6 percent to fund about a third of the renovation. “We should not raises taxes on people for the right of coming in here and spending money in our economy.”
Smith, who said he is being paid $20,000 to help lead a political action committee established by the Dolphins, countered that the combination of hotel taxes and about $190 million in private dollars required for the project makes the offer too good for Miami-Dade to pass up.
“My community can’t stand any more taxes,’’ he said. “Let the tourists pay. Let the private enterprise pay.”
While it has gotten little attention publicly, the banking provision is causing some consternation among advocates for the stadium plan. The Greater Miami Chamber of Commerce was an early supporter of the Dolphins’ stadium plan, before the banking provision was added at a March 6 Senate hearing. Now the business group views the bill “with mixed emotions,’’ Chamber President Barry Johnson wrote in an e-mail this week.
“Both an improved stadium and our community’s international banking are important to us,’’ he wrote.
Miami-Dade commissioners voted in January to urge passage of the Dolphins-backed legislation, and earlier this month approved a deal negotiated by Mayor Carlos Gimenez to give the stadium about $289 million in county hotel taxes over the next 26 years in exchange for the Dolphins refunding $120 million in 2043 and paying up to $120 million in penalties if major events don’t come to the stadium, including four Super Bowls. The team also will pledge to remain in Miami-Dade for 30 years.
A Gimenez spokesman, Fernando Figueredo, said the county isn’t getting involved in lobbying for the Dolphins bill or against the repeal of the banking tax break. “Obviously, we would rather it not impact the banking industry here,’’ Figueredo said of the stadium funding. “We would rather not see it in there.”
The Dolphins didn’t propose ending the tax credit when team lobbyists first crafted the stadium-subsidy bill, but the team has not objected to the provision since it was added. The issue gets more complicated since the team’s top lobbyist, Ron Book, also is paid by Miami-Dade as one of its lobbyists. When it was first tacked onto the bill in January, Book said “there is nothing wrong with the amendment” since lawmakers see the banking tax break as “outdated.” A team spokesman said this week the Dolphins would not comment on the banking provision.
A House version of the Dolphins bill would not impact the banking deduction, so finance lobbyists hope the effort to kill the subsidy would die there even if the stadium legislation passes the Senate on Thursday.
Removal of the banking tax credit is part of a wider effort by the Legislature to rollback tax breaks. The banking provision was created 30 years ago to lure foreign banks to Florida. Under the law, banks with Florida operations can take income from foreign depositors and loans and deduct those profits from revenue earned by the bank’s domestic operations in the state.
One problem is Florida allows the deduction no matter where in the United States the bank chooses to place its international banking operation — an option barred by federal banking law when Florida first adopted the deduction. Other states, including New York, have similar deductions but only for foreign banking centers within their states.
The Florida International Bankers Association estimates between five and 10 banks receive the Florida deduction but have their international-banking facilities elsewhere, while 15 to 20 banks have their international operations in Florida. All of those are based in the Miami area, according to FIBA.
Schwartz, the FIBA president, said he would rather have the Legislature tweak the law to remove the deduction for out-of-state international transactions so that Florida-based banks wouldn’t see their profits hurt.
“We’re a signature industry,’’ he said. “A lot of the economic recovery that has happened here is because of foreign investment.”