Lawmakers searching for dollars eye sales tax
 

TALLAHASSEE, Fla. (AP) – April 23, 2007 – Florida’s sales tax has helped keep the state’s checkbook balanced and credit rating so healthy over the years that it’s one place lawmakers like to turn when searching for dollars.

Since its 1949 debut as a 3-cent levy, the sales tax was increased by a penny in 1968, 1982 and 1988 to its present 6 percent level. Some legislators want to go there again to find the money to meet Gov. Charlie Crist’s chief campaign goal of reducing property taxes.

Although history has shown that tinkering with the state’s tax structure can be politically thorny, it hasn’t stopped Republican House Speaker Marco Rubio from pushing a plan that would leave Florida with the highest sales tax in the nation and the only state without an income or property tax on primary homes.

But veteran Capitol observers say shoppers probably don’t need to worry since the state Senate has shown little interest in the House plan. Critics have also said Rubio’s proposal would benefit the wealthy, whose largest state tax burden is often the levy on their home, while shifting the tax burden to the state’s poor, who spend a higher percentage of their incomes on taxable goods.

The Legislature is responding to the outcry from some home and business owners protesting inequities and sharp increases in property taxes prompted by soaring real estate values in recent years.

Rubio’s proposal would give Florida voters the opportunity to vote on a constitutional amendment in 2008 that would boost the existing 6 percent sales tax to as much as 8.5 percent in exchange for eliminating property tax on homesteads. California has a 7.25 percent sales tax, the nation’s highest (not including any local levies), and it also has income and property taxes.

Lobbyist John “Mac” Stipanovich, who served as a political adviser to then-Gov. Bob Martinez when the state sales tax was last boosted, said opposition from cities and counties, worried that they’ll lose substantial money, will doom Rubio’s plan.

“I doubt that there’s going to be any replacement revenues raised by the state to comfort local governments for the pain the Legislature may inflict upon them,” he said.

The Senate unanimously passed a plan to lower property taxes that ignores the sales tax – it clamps down on local government spending to offset the rollbacks. The plan also includes a provision that would let homeowners take existing tax breaks with them when they move within the state and a special exemption for first-time home buyers.

Both chambers must now negotiate the differences in each plan.

Sen. Dan Webster, R-Winter Garden, was in the House when Florida boosted the sales tax in 1982 and 1988. He said the basic premise of the state’s taxing policy has been to use sales tax dollars to pay state needs and property taxes to cover city, county and school needs. The state constitution bans an income tax.

“And it worked,” said Webster. “The only thing they did not foresee were the spikes (in real estate values).”

While food and medicine are among the most significant items exempted, the sales tax collections contributed $22.1 billion to state coffers in 2006.

Department of Revenue Executive Director Jim Zingale noted that Florida’s economy has outperformed states that rely on income taxes in recent years and enjoys a strong bond rating as a result. Florida relies almost exclusively on the sales tax along with taxes on cigarettes, booze, and gasoline and lottery proceeds to pay its bills.

“Historically it has matched our economy and our demographics,” Zingale said. “Over the last business cycle it has performed well.”

Messing with the tax structure has proved costly for some politicians in the past.
 
At least two governors snagged in the tax debates, Fuller Warren in 1949 and Martinez in 1987, were handily defeated in their next attempts at the office. 

Two of the Legislature’s most powerful members then, Sen. Dempsey Barron, D-Panama City, and Rep. Sam Bell, D-Ormond Beach, were upset in 1988 in the wake of a services tax fiasco.

Martinez signed a bill passed by the 1987 Legislature to apply the sales tax to a host of previously untaxed services, but repealed it just months later under tremendous political pressure – a flip-flop that cost him any chance for re-election.

Lawmakers were forced to increase the sales tax to bring in enough money to cover what they had spent in anticipation of the services tax windfall. That hike cost the average family about $185 a year.

A Democratic-controlled Legislature in 1982 went through a session somewhat similar to the present one when they increased the sales tax from 4 cents to a nickel. That move was partly a property tax relief measure, sending a half cent back to local governments.

The 1982 election-year sales tax hike had the backing of The Florida League of Cities and some big-city mayors. That led to a tax increase of about $100 per family – an increase backed by the Florida Chamber of Commerce.

The 1968 sales tax hike was in part to embarrass then-Gov. Claude Kirk, who two years earlier became the first Republican elected to that office.

“I ran on the basis of no new taxes and therefore the Democrats said they’ll have it,” Kirk, 81, said recently.

Crist, who unlike Kirk has a mostly friendly Legislature, ran on a pledge of lowering property taxes, and that’s the GOP’s dilemma this time.
 

Copyright 2007 The Associated Press, Brent Kallestad, Associated Press Writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.