How a proposed tax-cut package could affect TDT collections
Despite concerns about limits on future bed-tax collections, the House Ways & Means Committee last Wednesday approved a proposed $647.3 million tax-cut package that would give breaks to businesses and shoppers.
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The bill (PCB WMC 24-05), approved in a 16-6 vote, would provide about half of the $1.3 billion in tax breaks that lawmakers passed for the current fiscal year. The package, which is proposed for the fiscal year that will start July 1, likely will be changed as the House and Senate negotiate a final plan before the March 8 end of the legislative session.
A Senate proposal is expected to be released this week.
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While the House bill mostly drew praise from lawmakers and business groups, it faced concerns about a proposal that would limit new tourist-development taxes, often known as bed taxes, to six years. Also, it would require voter approval by July 1, 2029, for existing tourist-development taxes to continue.
Samantha Padgett, general counsel of the Florida Restaurant & Lodging Association, said the six-year limit could affect local tourism-related projects.
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“Future revenues will only be eligible for funding for projects in which bonds could be retired in six years or less,” Padgett said. “This will eliminate significant future projects that require a longer bonding period.”
Rep. Spencer Roach, R-North Fort Myers, expressed concerns that if bed taxes go away, Lee County residents could be responsible for some long-term expenses, including beach renourishment, and annual payments toward spring training stadiums. People who stay in places such as hotels pay tourist-development taxes.
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“I don’t like taxes at all, but I like them a lot more when out-of-state folks pay them,” Roach said.
The Ways & Means Committee is expected to receive a presentation next week about tourist-development taxes.
“I think it’s something we need to have a conversation about,” committee Chairman Stan McClain, R-Ocala, said. “It’s been 44 years (since the tax was created) and virtually unchanged. And it’s bigger and bigger and bigger. What was it, Palm Beach County (collects) $84 million? Who would have thought that 44 years ago?”
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The House package includes a series of sales-tax “holidays,” which are periods when shoppers can avoid paying sales taxes on such things as back-to-school items, hurricane-preparedness supplies and tools. But it would not offer as many holidays as during the current fiscal year. For example, it would offer one holiday for back-to-school items such as clothes, school supplies and computers. The state offered two such holidays this fiscal year.
Rep. Anna Eskamani, an Orlando Democrat who voted against the bill, said she would “love to see our tax package have more consumer tax breaks. We’re cutting those sales-tax holidays in half.”
Eskamani unsuccessfully tried to change the bill to allow voter-approved local bed-tax dollars to be used for affordable housing.
The House proposal, however, would allow Monroe County to use tourist-development and tourist-impact tax dollars to provide affordable housing for employees of tourism-related businesses.
Gov. Ron DeSantis proposed a $1.1 billion tax package, but legislative leaders have said they expect a tighter budget in the coming year, in part because of less federal money related to the COVID-19 pandemic.
The House package, for example, leaves out a $409 million recommendation by DeSantis to provide a one-year exemption on certain taxes, fees and assessments on property-insurance policies for homes up to $750,000. Also, it doesn’t include a DeSantis proposal for $22 million in savings through an exemption on insurance-premium taxes on flood-insurance policies.
“The tax package is a little smaller,” McClain said. “We’re still negotiating a lot of that stuff between the governor’s office and the Senate.”
The largest part of the House package, projected at a $339.6 million reduction to state and local revenues, would come from lowering a commercial-lease tax that business groups have long sought to eliminate.
The lease-tax rate is already set to go down from 4.5 percent to 2 percent in June, and the House would further lower it for a year to 1.25 percent starting July 1.
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