Back-to-school shopping would be cheaper, cell phone bills would drop and college textbooks would be a little less expensive under a wide-ranging tax cut package that emerged in the Florida Legislature on Thursday.
In all, the Florida Senate proposed a carefully-crafted $400 million tax cut package that falls short of Gov. Rick Scott’s push for $700 million in cuts. It aligns close enough to the Florida House’s proposal, however, that lawmakers are confident there will be less haggling over the specifics of tax cuts as they finalize a budget in the waning days of a special session.
The full Senate is set to pass their tax cut package Monday and House Speaker Steve Crisafulli praised the “great work product” suggesting that the Senate plan could be largely what is ultimately presented to the governor for his final approval.
“Overall it’s a good package,” Crisafulli, R.-Merritt Island, said, signaling a House vote embracing most of the tax cuts next week.
While tension is easing between the House and Senate on the issue, it’s not happening without a little backroom pressure to keep lawmakers in line.
To avoid any potholes in the final nine days, Senate leaders applied quiet pressure to its members to avoid any amendments to the tax package deal that could have created any new fissures with the House. Sen. Chris Smith, D-Fort Lauderdale, wanted to reduce the size of one tax break for gun club memberships, but he withdrew the amendment after Republican leaders lobbied him to reconsider.
“We’ve been very collaborative in the development of all this, so there’s no surprises right now,” said Senate Appropriations Chairman Tom Lee, R-Brandon. “It’s a mixture that everyone can live with.”
At the core of the Senate tax plan is a 10-day sales tax cut on back-to-school shopping that would start Aug. 7 and a communications tax cut that would save Floridians about $20 a year on a $100 cell phone bill starting as soon as July 1.
Florida has held sales tax holidays for back-to-school shopping of varying lengths since 1998. The 10-day proposal by the Senate would match the longest period ever allowed for the program. It would also be seven days longer than what the House had recommended as part of their tax-cut plan.
During the holiday, clothing, footwear and backpacks under $100 would be exempt from taxes as would school supplies under $15. Up to $750 of the price of a computer would also be exempt.
Sen. Dorothy Hukill, R-Port Orange, said extending the sales tax holiday on schools under $100 is important because it assures more people will have a chance to take advantage of it.
“It is very popular with the public,” Hukill said.
Another key component to the tax cut plan has been the state’s communications tax that is charged on cable and cellular phone service bills. Most sales of communications services are subject to a state communications services tax rate of 6.65 percent. Under the Senate plan, that tax would drop to 4.92 percent. On a $100 bill, that would mean $20.76 in savings over a year. A House plan passed last week would have dropped the tax to 4.85 percent, but stretched its implementation over two years.
Given the relatively minor differences, State Rep. Matt Gaetz, R-Fort Walton Beach, chairman of the House Finance and Tax Committee, said he was very encouraged by the Senate plan.
In a year in which the House and Senate have been at odds on numerous issues, like healthcare funding, Gaetz said the tax cut packages are bringing the chambers some harmony. He said he sees no major deal breakers in the Senate plan and is confident the House and Senate will have a tax proposal to deliver to the governor.
While consumers would see some breaks, many cuts will only apply to special interest groups that the House and Senate both aim to protect. Both tax cut plans exempt aviation fuel for four accredited flight training schools in Florida, cut sales taxes on insecticide and feed for aquaculture products and exempt gun club memberships from taxes. Also taxes on irrigation and farm storage equipment would be exempt under both bills.
But pear cider growers might be out of luck, if the House accepts the Senate’s proposal. Under the House version, pear cider makers would have had their product reclassified to reduce taxes. Currently pear cider is taxed at a rate of $2.25 per gallon, akin to wine. Under the House plan that would have been slashed to 89 cents per gallon.
A $400 million tax cut represents a big drop from what Scott pitched to legislators at the beginning of the year. In January, the governor called for a $470 million cut in the communications tax. In addition, he wanted the state sales tax on manufacturing permanently eliminated. Neither chamber agreed to the manufacturer’s tax break and both have proposed only about half of what Scott was looking for in cutting the communications tax.
Scott’s office gave little indication of how he views the shrunken tax package that is emerging.
“We are continuing to monitor the process,” said Jeri Bustamante, a spokeswoman for Scott.
Scott might be able to claim victory, at least, in his push to cut taxes on college textbooks. Scott wanted the tax permanently lifted to save students about $60 a year. The House initially proposed exempting textbook from taxes on just three days. The Senate plan unveiled Thursday however, would eliminate the tax for the whole year.
“We want to try to help the governor achieve his agenda and his tax cuts,” Lee said.
Tax Cut Package Taking Shape
The House and Senate moved closer on an estimated $400 million tax cut package Thursday, but there are still differences to iron out before the Legislature can send their plan to Gov. Rick Scott for his approval.
Some Key Tax Disagreements
COMMUNICATIONS TAXES: Both chambers want to reduce the communication services tax applied to most cable and cellular phone service bills. The state currently charges 6.65 percent. The House has proposed dropping that tax to 5.75 percent this year, then dropping it again to 4.85 percent temporarily from October 2016 to September 2017. The Senate has proposed dropping the whole rate to 4.92 percent immediately.
BACK TO SCHOOL TAXES: The House has proposed a three-day break from the sales tax on back to school shopping on clothing and backpacks under $100, school supplies under $15 and computers up to $750 on the purchase price. The Senate has proposed a 10-day tax holiday.
COLLEGE TEXTBOOKS: The House proposed having three days where college students could by textbooks with no sales tax. The Senate wants text books tax-free all year.
PEAR CIDER: The House has proposed cutting the sales tax rate pear cider manufacturers from $2.25 per gallon to $0.89 per gallon. The Senate has left the tax untouched.
Some Taxes They Agree on
AIRPLANE FUEL: Both chambers have proposed eliminating the jet fuel tax used for flight training program by a school of aeronautics or college of aviation based in Florida.
GUN CLUB MEMBERSHIPS: Both chambers have proposed exempting gun club memberships from state sales taxes.
FARM EQUIPMENT: Both chambers have proposed eliminating sales taxes on farm equipment used for storage purposes and irrigation equipment.
AQUACULTURE: Both chambers have proposed treating aquaculture (farming of aquatic animals and plants like tropical fish, clams and alligators) the same as other livestock producers by eliminating taxes on insecticide and feed that is used.
Sources: Florida House; Florida Senate