A bill dies, but the fear of a looming deficit lives on

Mar 21, 2008

Herald Tribune--Mar. 21, 2008

TALLAHASSEE — Sending the clearest signal yet that legislative leaders are not interested in raising taxes to help ease Florida’s budget crisis, a House committee on Thursday killed a bill that would have made it harder for large, multi-state corporations that operate in Florida to lower their state taxes by shifting profits to other states.

The vote came despite the state’s need to cover a hole of more than $2 billion in the next state budget. It was also set against the longer-term possibility that the state might have to come up with another $9 billion if voters approve a constitutional amendment in November that would eliminate state-mandated property taxes for schools.

While the Florida House was rejecting the corporate tax bill, the anti-tax message was also reverberating in the Senate on Thursday.

Senate leaders sent a bill that would increase Florida’s cigarette tax by $1 a pack to five separate committees. The multiple committee assignments for a bill is the Senate leadership’s way of showing it does not want the bill to make it to the floor for a vote.

“Obviously somebody doesn’t like it — that’s normally what it means,” said Sen. Mike Bennett of Bradenton, who Wednesday became the first Republican to sponsor the bill. “A lot of people don’t want to raise taxes.”

With its tax of 34 cents per pack, Florida has the fifth-lowest cigarette tax in the nation. The last time lawmakers increased the tax was in 1990.

Proponents of raising the tax say a $1-a-pack increase would generate an estimated $1 billion a year.

With five Senate committees to make it through, Bennett said the bill’s chances of passing are “slim to none.”

Meanwhile, the corporate tax measure defeated Thursday in the House might have raised as much as $365 million a year.

The bill’s sponsor, Rep. Dan Gelber, D-Miami Beach, said that money could be used to boost higher education funding at a time when state universities are threatening to reduce enrollment.

But the House Government Efficiency and Accountability Council defeated the bill (HB 1237) in a 10-6 vote. The Republicans, who hold the majority, argued that it was wrong to raise taxes during an economic slump and that the measure could hurt Florida’s business climate.

Rep. Frank Attkisson, R-Kissimmee, the council chairman, said he feared revising the way corporate taxes are calculated would raise the price of “breadbasket” items for his constituents.

“If I’m going to sit here and realize that I’m going to raise the prices of Wal-Mart and Target for the people of my district who work hard, I’m not going to do it,” Attkisson said. “I’m going to vote for anything that will expand jobs and keep prices low.”

But Gelber said: “If you don’t look at truly unfair tax avoidance and tax loopholes you will never do the citizens of this state justice and you need to start thinking about it. You’re going to have to get serious about tax fairness in Florida.”

In the House council, Gelber argued that Florida should adopt a “combined reporting” system for its 5.5 percent corporate income tax, saying that 21 other states have it and that the current system puts Florida-based businesses at a disadvantage relative to large multi-state companies that can legally shift some of their profits out of state.

Florida State University President T.K. Wetherell, a former House speaker, testified in favor of the bill, arguing that it was not a new tax but merely a way “to collect revenue that belongs in the state.

“I don’t believe it’s an issue where somebody can say you’re a tax-and-spend liberal,” Wetherell said. “It’s tax fairness.”