A bill that would update the Emergency Communications Number E911 System to include prepaid communications and account for retail changes in communication service and advances in technology (HB 807, Rep. Stuebe) passed unanimously in the House Energy and Utilities Subcommittee this week. FAC’s Davin Suggs provided supporting testimony during the referenced bill hearing. The House Finance and Tax Subcommittee introduced an Internet Sales Tax bill (PCB FTSC 13-02) that would offset new revenues with an extended sales tax holiday to benefit consumers, and a House committee bill to address local business tax is expected in the upcoming weeks.
Communications Services Tax (CST)
House Finance and Tax Subcommittee (conceptual)
- Concept of reforming the CST to consolidate the taxation of communications services into a single unified statewide rate, regardless of the delivery medium or location of the services user.
- Consolidation is intended to be revenue neutral from both the state’s and any individual unit of local government’s perspective.
- To achieve that overarching reform objective, the concept language replaces local government communications taxation authority with a state revenue sharing arrangement, modernizes the definition of “prepaid calling arrangements” and applies the single unified rate to sales of such arrangements, removes an exemption on residential land line service, and reduces the collection allowance granted to dealers of communication services.
- The concept language also eliminates the authority of local governments to levy permit fees on dealers of communications services but will grandfather in any local governments currently levying such fees to maintain revenue neutrality.
- The conceptual language is still under evaluation by the revenue estimating conference and is not anticipated to be heard in week three. There is no senate companion of the house conceptual language.
Local Business Taxes
House Finance and Tax Subcommittee (conceptual)
- Summary: The draft language embodies concepts with an overarching purpose to replace the current local business tax structure in ch. 205, F.S., with a simplified version of the tax that is more consistent across various business types and among taxing jurisdictions. This is accomplished by:
- Establishing a uniform classification system.
- Establishing a flexible rate structure.
- Grandfathering certain local taxing jurisdictions to allow taxation under the current structure to continue under specified circumstances.
- Eliminating “overlap” of city and county taxes.
- Retaining current local administration of the tax.
- New structure would become effective October 1, 2014, with a transition process from the current structure to the new structure, and allowing taxing jurisdictions to replace revenues raised under the prior system.
- Revised bill language was sent to bill drafting this week. It is now anticipated that a proposed committee bill will be introduced on 3-20-13 in the House Finance and Tax subcommittee.
- Currently, prepaid communications are not included in the base of services subject to the application of E-911 fees which fund E-911 operations in Florida Counties. The bills include prepaid communications in the base of E-911 fee assessments.
- Three referrals in House and Senate; HB 807 passed unanimously in the House Energy and Utilities subcommittee on 3/12/13. The bill will next be heard by the House Finance and Tax subcommittee at a date that has yet to be determined. FAC staff provided supporting testimony during the referenced bill hearing on 3/12/13.
Internet Sales Tax
- HB 505 (R. Rehwinkel-Vasilinda) relating to Streamlined Sales and Use Tax Agreement
- SB 88 (S. Margolis) relating to Mail Order Sales
- SB 316 (S. Detert) relating to Taxes
- HB 497 (R. Moskowitz) relating to Small Business Fairness Act
- PCB FTSC 13-02 (House Finance & Tax) relating to Sales and Use Tax
- A common goal is to address the taxation (Florida sales tax) of sales by out-of-state retailers conducted over the Internet. Although this concept is expected to produce a positive fiscal impact, some of the bills also employ reductions in other taxes to create a revenue neutral scenario.
- SB 316 has passed its first committee of reference and has three additional committee hearings scheduled.
- The revenue estimating conference returned an indeterminate fiscal impact for SB 316 by Sen. Detert on 3/11/2013.
- Other bills have not been heard by their respective first committees of reference.
- House Finance and Tax Subcommittee held a workshop on related concepts and introduced PCB FTSC 13-02 – Relating to Sales and Use Tax on 3/14/13 during their scheduled committee meeting. The proposed committee bill amends s. 212.0596, F.S., to provide that a “mail order sale” includes the sale of tangible personal property over the internet. The bill creates s. 212.0802, establishing a recurring sales tax holiday on clothing and school supplies. The length of the holiday will be determined each year by the Revenue Estimating Conference to reduce total sales tax collections by at least the amount of new collections received pursuant to the changes to the mail order sales statute in the bill.
- Currently, commercial rentals are taxed at 6% at the state level, plus the local discretionary surtax. Bills would phase out the sales and use tax on commercial rentals by reducing the tax rate by 1% per year and completely repealing both state and local sales and use taxes in the year 2019.
- Three referrals in House and Senate; workshopped in H. F&T. Proposal identified by the Florida Association of Realtors as its primary legislative objective for 2013. According to the Florida Revenue Estimating Conference, this proposal would have a negative recurring fiscal impact to local governments of $386.2M annually.