Changes to communications taxes coming under bill signed by Governor Scott

Apr 6, 2012

The following article was published in The Florida Current on April 6, 2012:

Changes to communications taxes coming under bill signed by Scott

By Travis Pillow

Gov. Rick Scott on Friday approved a set of tweaks to Florida’s communications taxes, as part of a measure that could lay the groundwork for a more wide-ranging overhaul of the state’s communications tax system.

The state levies a 6.65 percent communications services tax on items such as phone service, and local governments apply a wide range of additional taxes that range from 0.1 to 7 percent. A few key provisions in HB 809 that were sought by the telecommunications industry would clarify that people who buy phone service in “bundles” with digital items such as cloud data storage and home security would not have to pay communications taxes on those items when they are not listed separately on customer bills.

“This legislation takes a step forward to begin modernizing and reforming Florida’s decade-old phone tax laws to reflect an iPhone world,” AT&T spokeswoman Stephanie Smith said.

HB 809 was among dozens of bills that Scott signed Friday, according to an after-hours announcement by the Governor’s Office.

The state’s economic forecasters wrestled with numbers throughout the session to determine what impact the bill will have on local governments, some of which rely on the communications taxes as a source of general revenue. They ultimately decided that the bill’s various provisions would cost the state’s local governments an “indeterminate” amount, likely exceeding $25 million a year once the changes fully take effect, which would not happen in the first year.

The bill’s supporters had disputed the fiscal impact and said any impact that did occur would be the result of eliminating taxes that customers should not have been paying in the first place. 

Sen. Ellyn Bogdanoff, R-Fort Lauderdale, cited the potential impact on local governments when she proposed an amendment that would have eliminated the tax changes and created a study group to look at the “Rubik’s Cube” that is the state’s communications tax system, which varies across hundreds of jurisdictions across the state and may be due for further updates to accommodate changes in technology.

A gross receipts tax includes a levy on landline telephone service that flows into the Public Education Capital Outlay, a major source of funding for construction at colleges and universities that has been depleted in recent years. 

The bill ultimately passed both the House and Senate chambers without a negative vote, with the both the tax changes and the working group provisions. Department of Revenue Executive Director Lisa Vickers will now be tasked with appointing the panel’s eight members, including representatives from local governments and different segments of the communications industry. Its report will be due next February.

“It may be an outdated tax,” Bogdanoff said during one committee hearing. “We don’t know that, but that’s what this work group hopes to accomplish, is to figure out where we go from here.”

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