Tax proposal alternative emerging

Jan 22, 2008

Tax proposal alternative emerging


As groups on both sides of the Amendment 1 tax plan jockey for voter support leading up to the Jan. 29 referendum, the state panel weighing a proposition that could placate them all is quietly going about its business.

Though it didn’t receive much publicity, a plan to slash property taxes by 25 percent or more and replace the revenue with new sales taxes on billions of dollars in currently untaxed goods and services won a small but significant victory Thursday.

Despite vocal opposition from businesses that support the exemptions, a subcommittee of the state Tax and Budget Reform Commission liked former state Senate President John McKay’s plan enough to send it to a second round of discussion.

"We’ve got to do a couple modifications and get back with the economists to prepare for the next round," said McKay, a Bradenton businessman.

"I’m very, very pleased with what occurred (Thursday), and I continue to be quite optimistic that we’ll cut property taxes and replace that revenue with the elimination of special-interest exemptions and exclusions."

Under the plan, a large chunk of taxes that go to schools would be cut from property-tax bills and replaced by repealing $8 billion worth of sales tax exemptions on services and items like lawn care service, cattle growth enhancers and even ostrich feed.

"Necessities of life" items, like food, prescription drugs and health services, would remain exempt from sales tax.

After a few minor details are smoothed over, McKay will present the plan to another subcommittee Feb. 11. If it passes muster there, it would go before the entire commission. There, 17 of 25 members would have to approve it for the plan to go before voters on the November ballot.

McKay, a state senator from 1990 through 2002, pushed for a similar tax overhaul during his last year in office. At that time, he wanted to eliminate $9.5 billion in sales tax exemptions to lower the sales tax rate to 4 percent.

The proposed referendum died in an appeals court when a judge ruled that the measure was misleading to voters. The business groups that challenged the proposal then were the same ones against it Thursday, McKay said.

"The opponents said the same thing they always say, which is, ‘You should have a review of the exemptions,’ " McKay said. "They said, ‘You shouldn’t take away our exemption, because the world will collapse if you do.’ "

For now, the TBRC is awaiting the results of the Amendment 1 referendum. If it’s approved by 60 percent of voters, it would double the homestead exemption for properties valued more than $75,000, allow homeowners to keep their Save Our Homes caps when relocating and cap non-homesteaders’ taxable values from climbing by more than 10 percent a year. The major provisions of the plan wouldn’t apply to schools, which make up 52 percent of property-tax bills in unincorporated areas of Manatee County.

And while the TBRC waits on the Jan. 29 amendment, lawmakers are starting to plan additional tax reform to complement the amendment. Several state leaders have urged voters to approve the amendment because it provides at least some relief. But they say they can and will do more when their regular session begins in March.

"As badly as I want everyone to vote for Amendment 1, I still think there’s plenty of work to do," said state Sen. Mike Bennett, R-Bradenton. "So we’re going to go back and investigate it and see what else we can do."

Those in favor of Amendment 1 say it will save the average Florida homeowner about $240 a year. Many in the real estate industry say Amendment 1’s portability aspect would spur home sales and a lagging economy.

But those opposed say Amendment 1 would do little to benefit those in most need of tax relief: business owners and non-homesteaders. They’re urging anyone who will listen to vote "no" on the amendment and wait for TBRC’s plan.

"I think the Legislature needs to back off and let the TBRC weigh in," Sarasota County Commissioner Nora Patterson told a group Thursday.

When legislators convene this spring, Bennett plans to propose a large economic stimulus package, highlighted by a plan to cap property taxes at 1.35 percent of a property’s taxable value. Taxpayer groups around the state hatched the plan in November but haven’t been able to get the required 611,000 signatures required to have it on the November ballot.

Taxpayer groups, including the local Coalition Against Runaway Taxation, say they’ll continue to collect signatures to send to Tallahassee to influence policymakers.

"We’re doing a full-court press, going to as many precincts as we can to get more signatures," said CART President Don Schroder.

"We hope we’re well on our way to 300,000 by the time the Legislature meets and TBRC makes recommendations in the spring. If we can get numbers like that, we’ll have tremendous pressure from citizens to ensure that the Legislature and TBRC make positive, proactive changes in the tax laws."

Nicholas Azzara, county reporter, can be reached at 745-7081. State panel led by John McKay hopes to slash property taxes, pare exemptions