Plan aids homeowners, slashes business perks
NICHOLAS AZZARA
Miami Herald
Nov 4, 2007
BRADENTON -- Former state Senate President John McKay has proposed a tax plan that would reduce homeowners' property taxes up to 45 percent at the expense of business interests that have been exempted from sales tax for decades.
McKay, a member of the Taxation and Budget Reform Commission, took steps Friday to address a ''patently unfair'' tax system by filing a proposed constitutional amendment with the commission that would direct the Legislature to review all items and services that are not being taxed in order to to repeal $15 billion worth of sales-tax exemptions on services and items like lawn care service, professional sports skyboxes and cattle growth enhancers.
The new revenues collected would replace a bulk of the property taxes collected for schools.
''Necessities of life'' items like food, prescription drugs and health services would remain exempt from sales tax. But hundreds of other exemptions would be reviewed and could be subject to sales taxation. McKay estimates up to $100 billion in sales taxes goes uncollected each year.
The plan would eliminate property taxes for education except those that have been pledged for bonded capital projects. ''This only covers somewhere in the neighborhood of 15 percent of all the exemptions and exclusions, but that would be a very significant cut in everybody's ad valorem taxes,'' said McKay, a state senator from 1990 through 2002. ``You could structure it so the exemptions and exclusions you eliminated, to a large degree, are those that benefit special interests.''
A three-fifths vote would be required by both houses of the Legislature to reenact an exemption.
'It will give people the opportunity to say, `We want property-tax relief' and the only way to do that is to take schools off the property tax,'' said Tallahassee attorney Robert Nabors, who co-authored the amendment.
'Over the years, special interests have gotten exemptions on certain goods and that's eroded the sales-tax base. This tells the Legislature to look at the exemptions and privileges you've given and ask yourself, `Why isn't this taxed?' ''
It's a fresh twist on a measure McKay pushed in 2001, toward the end of his tenure in the Senate.
At that time the plan called for lowering Florida's sales tax from 6 percent to 4 percent. The proposed referendum died in an appeals court, where a judge ruled the language was misleading to voters. Several business groups challenged the proposal, which would have given a special legislative panel the power to eliminate sales-tax exemptions worth billions of dollars.
''Before the property taxes reached this crisis point, we tried to eliminate exemptions and exclusions in order to create a fairer tax system,'' McKay said. ``In eliminating those, you would have also been able to lower the sales-tax rate. This proposal has some of those elements, but you're applying additional sales-tax revenues in order to lower property taxes.''
Similar to the legislative process, the proposal will be examined extensively in the coming months, first by the commission's Finance and Tax committee before being presented to the 25-member group. The group of business executives, elected officials and governor appointees has been traveling the state gathering information and tax-reform proposals from experts and from the public.
The tax commission can make suggestions to state officials on tax reform, or with a two-thirds majority the commission may place proposed constitutional amendments on the ballot. McKay thinks the proposal will get widespread support from the commission.