Fla. panel to explore services tax

Fla. panel to explore services tax

	Published : Fri, 30 Nov 2007 23:05 By : Agencies Print this Story

TALLAHASSEE, Fla. (AP) - A constitutional panel revived the idea of applying the state's sales tax to services Friday, something the Legislature enacted 20 years ago but repealed within months after a crescendo of opposition from affected businesses.

A committee of the Taxation and Budget Reform Commission voted 6-1 to introduce a tentative services tax proposal. It would eliminate, or 'sunset,' current exclusions for services ranging from legal representation to hair styling but allow the Legislature to vote them back in if they serve a public purpose.

The proposed constitutional amendment will return to committee for further review and possible modification before any decision is made to send it to the full commission.

The only negative vote in the Finance and Taxation Committee came from Randy Miller, who was the state's revenue director during the brief life span of the 1987 service tax.

Miller, now executive vice president of the Florida Retail Federation, said the tax was a headache to administer, put Florida at a competitive disadvantage with other states and resulted in national advertising and convention boycotts.

'It was just the wrong thing to do,' Miller said. 'The Legislature did try to address it, to fix it, tweak it, but it all failed.'

The committee two weeks ago introduced a similar proposal relating to exemptions for commodities except for such essentials of life as food and medicine.

Commissioner Martha Barnett, a Tallahassee lawyer and former American Bar Association president, offered the services tax proposal.

She argued it's still a viable alternative for broadening Florida's tax base and providing revenue that could permit the state to cut the overall tax rate or provide other tax relief. Lawmakers increased the sales tax rate from 5 percent to its present 6 percent when the 1987 services tax was repealed.

'It became both a political as well as, I think it's fair to say, an administrative challenge if not a nightmare,' Barnett acknowledge.

She said the commission, though, could learn from that experience.

'We tried to do too much too fast with too little information,' she said.

The commission's Governmental Procedures and Structure Committee, meanwhile, discussed but took no immediate action on a variation of the same theme proposed by Commissioner John McKay, a former Florida Senate president from Bradenton.

McKay's proposal would require the Legislature to eliminate $9 billion in sales tax exemptions and service exclusions in exchange for repealing minimum property taxes the state requires school districts to levy. He estimated it would cut property tax bills by about 45 percent.

Most committee members said they liked the concept but some had problems with the details. Former state Rep. Carlos Lacasa, a Miami lawyer, said he would prefer sunsetting the exemptions but was worried McKay's plan would result in a services tax, which he has a problem with.

Although McKay voted for the Finance and Tax Committee's services tax proposal, he doesn't give any sunset plan much chance of passing because businesses will campaign against it. An amendment needs 60 percent approval from voters.

'I don't for a second believe we are going to have a sunset,' McKay said. 'I think it would be a great idea but I don't think that would happen.'

The Planning and Budgetary Processes Committee unanimously approved a proposal that would move starting date of the Legislature's annual session up two months to the second Tuesday in January.