Recapping Week 7 of the 9 Week Legislative Session
Week seven wraps up tomorrow with just two weeks left in legislative session. As we count down the days until the Constitutionally mandated 60th day Sine Die on Friday, May 3, bills are continuing to “die.” With bills falling by the wayside, we are beginning to focus on the budget conference with budget conferees expected to be announced any day.
The budget negotiations will impact one of NFIB’s big priorities – ensuring small businesses get a big piece of the tax cut package. Both the House and Senate are setting aside money again this year to provide a tax cut for businesses, but we’re seeing two very different approaches. The good news is that both of the tax packages include a cut in the business rent tax that NFIB has been pushing for several years.
The House is moving forward a bill that would reduce the business rent tax (BRT) from 5.7% to 5.35% and would generate a savings for small business owners in the range of $100 million per year. While this is still less than we would have hoped for, this would represent the largest cut in the BRT to date. This bill also contains provisions supported by many retail chains that would create a back-to-school sales tax holiday and a disaster preparedness sales tax holiday. The House version of the bill is teed up and ready for passage on the floor of the House possibly as early as next week.
The Senate version of the tax cut bill passed through the Senate Finance and Tax Committee on Tuesday and is set to be heard in its final committee, the Appropriations Committee, possibly Monday or Tuesday of next week. The Senate has taken a much different approach to tax cuts. Instead of proposing a straight tax cut, they are proposing a “tax swap” in which they are seeking to enact an internet sales tax on out-of-state retailers who sell and ship products into Florida. The state budget forecasters are estimating that this new tax collection would create roughly $700 million in new revenue. The offset for that new revenue would be a $700 million cut in the business rent tax which would change the BRT rate from 5.7% to 3.5%. The Senate bill also peppers in several of the House provisions including the back-to-school and disaster preparedness sales tax holidays. NFIB is neutral on this proposal.
Another tax bill that passed through the House Ways and Means Committee this week represented a brand-new issue for Florida which would allow a business owner to “absorb” the sales tax and pay the tax on behalf of the customer if a business owner chooses to do so. This would represent a policy shift in Florida where this practice is currently illegal. In many cases, retailers enter into contracts with manufacturers and as a result of these contracts, a set MSRP must be charged and discounts are not permitted. This bill would allow those retailers to pay the sales tax on behalf of their customers instead of charging them a sales tax. The business would still be required to remit the sales tax to the Department of Revenue and it would require the business owner to notify the customer that they are not exempting the tax and that the business is simply absorbing the tax. This bill is not expected to cost the state coffers any money because it doesn’t exempt the tax but merely gives businesses the option of paying the tax themselves. We expect this bill to get traction these last two weeks and it could wind up being amended onto another bill for passage this year.
While the tax debate largely dominated the agenda for the business community this week, next week will have us shifting gears to get some tort reform across the finish line and bring several other NFIB-backed bills in for a landing. As always, be on the lookout for action alerts next week. We had a great response this week to our alert calling on the legislature to repeal the Constitution Revision Commission. Thank you to those of you who took time out of your busy day to send an email to your legislators. I can’t stress the importance and impact those emails have on legislators enough. They definitely get the message when small business owners write to them.
Contact us with questions: [email protected] or 850-681-0416.
Tim Nungesser
Legislative Director
NFIB in Florida
