In Florida, Follow the Money

A six percent sales tax is levied on a variety of goods and services in the state of Florida. At the same time, many goods and services in the state of Florida are exempt or excluded from a sales tax.

The reason some goods and services are not taxed is largely due to the fact that swarms of lobbyists spend many hours and big bucks to schmooze state legislators to help them better understand the needs of the lobbyist's well-heeled, politically-connected clients.

The message is: If you want to get re-elected, don't mess with our exemption and/or exclusion.

In 2008, there are close to 300 exemptions costing the state almost $36 billion, according to a draft of the 2008 Florida Tax Handbook. On the other hand, the state receives only $21 billion from goods and services that are taxed.

We've got a big problem here, and I would guess other states are facing a similar problem. The Florida Taxation and Budget Reform Commission is proposing to drastically cut taxes by eliminating the property tax for public schools. Just how damn idiotic is that?

That represents a hole of $8 - 9 billion. The Commission is suggesting that the lost revenue could be made up by forcing the legislature to plug sales tax exemptions and tax some services.

This proposal is strongly opposed by the Florida Chamber of Commerce. It is likely to be shot down. Here's one big reason: The foxes are in the henhouse. The Taxation and Budget Reform Commission includes 8 lobbyists and four members with ties to the Florida Chamber of Commerce.

The list of sales tax exemptions covers three full pages in itty-bitty type in the Florida Sales Tax Handbook. Here are some items currently exempt from paying a sales tax:

Ostrich feed (even though there are no Ostrich farms currently operating in Florida!), airplane parts, boiler fuels, taxicab equipment, newspaper advertising inserts, pesticides, movie theater concession rent, the Golf Hall of Fame, bottled water, charter fishing boats, farm equipment, printing supplies, professional sports stadiums, fill dirt, human organs, commercial fishing nets, bank services, legal services, radio, TV and cable companies, skyboxes, cane poles and fishing rods, the International Game Fish Association World Center...

Some items are essentially untouchable: nobody is going to tax grocery items, heating fuels for homes, prescription drugs, charges for hospital rooms and meals, medical services...these are exempt from a sales tax and they're gonna stay that way.

The other problem is that the people receiving many of the exemptions mentioned hire lobbyists who exert great power over our Florida legislatures. They help our legislators conveniently forget they're supposed to represent the people and fool them into thinking that powerful corporate interests have the people's interests at heart. Our legislators are afraid to tax the corporate interests lest they suddenly find themselves out of the legislature and back on the street peddling life insurance.

For example, back in 1987, the state tried to tax lawyers, barbers, real estate agents and advertisers. The caused a huge political tsunami. Eight months later they repealed those taxes.

What they did to make up the lost revenue is raise the sales tax from 5 to 6 cents. No matter, several legislators lost their jobs and Governor Bob Martinez failed at re-election.


It's a conundrum. Florida has a service-driven economy, but does not tax services. Hundreds of goods do not pay a sales tax.

Here's a partial list of the exemptons and exclusions from Tampabay.com. It also shows how much each could have paid toward this year's budget: (in millions of dollars)

Exemptions

Electricity for manufacturing - $71.3
Charter fishing boats - $63.5
Boiler fuels used by industries - $55.3
Bottled water - $42.3
Newspaper and magazine inserts - $41.3
Farm equipment - $33.8
Ostrich and livestock feed - $27.9
Free advertising publications - $24.7
Boats docked temporarily in Florida - $5.0
High school and college stadium skyboxes - $ 0.9

Exclusions

Lawyers - $658.8
Architects and engineers - $511.1
Radio-TV broadcasts - $168.5
Accountants - $272.0
Barber and beauty shops - $87.3
Dry cleaners - $64.6
Data processors - $52.8
Health clubs and golf courses - $30.9
Taxis and limousines - $22.4
Athletic and theatrical agents - $19.5


Again, these are partial lists. The Taxation and Budget Reform Commission is studying the matter. If the commission decides to fill budget holes by increasing taxes on some goods and services, their recommentations will be placed on the ballot for November 4, to be decided by the people.

Hopefully, by the time it is all over, the people will have realized that in order for the state to provide services for its residents--such as schools, roads, bridges, health care, police, courtrooms, judges, prisons, etc., it must be able to fund those services, and in spite of the
anti-tax talk that is so popular these days, the state receives those funds from taxes--in one form or another.

Hopefully, the people will not be fooled into thinking that the answer is not to eliminate many of these exemptions and exclusions, but to raise the sales tax. A high sales tax hurts the poor the most. But because the poor cannot hire lobbyists to look after their interests in the state capitol, they are usually the ones to get the shaft.

Maybe this year will be different. But don't count on it.