Commission rejects limiting Florida tax revenues

Commission rejects limiting Florida tax revenues
Proposal paving way for Internet sales tax gets OK
By Bill Cotterell • FLORIDA CAPITAL BUREAU POLITICAL EDITOR • April 15, 2008

A powerful tax commission Monday rejected a proposal to limit state and local tax revenues.

But the Taxation and Budget Reform Commission did approve a proposal that might end up with Floridians paying a sales tax on things they buy over the Internet or from home-shopping channels.

The commission's failure to put the "taxpayers bill of rights" idea up for a statewide referendum doesn't mean the idea for putting a lid on growth rates for government revenue is dead. The House Policy and Budget Council is scheduled to consider a proposal today to do legislatively what the commission fell short of doing.

"Today we are not going to give our citizens a chance to restrain government -- not choke government, but restrain government," said Mike Hogan, the Duval County tax collector who sponsored the tax-limitation proposal. It would have imposed a formula based on population growth, inflation, plus 1 percent on revenue growth in state and local governments.

Before the vote, with rejection all but certain, the commission substituted language requiring a two-thirds vote on new taxes, rather than a hard cap. After adopting that amendment, the panel voted 14-9 on the proposal itself -- three votes shy of the super-majority needed for adoption.
House budget boss Ray Sansom, R-Destin, said the tax cap won't go away. His House Policy and Budget Council has a proposal (HB 7125) on its agenda today to accomplish the same thing.

"Ultimately, the Legislature makes these kinds of decisions," said Sansom said Monday.
Chief Financial Officer Alex Sink warned the tax commission that the tax cap might backfire by costing billions in higher interest rates on government bonds. In a brief morning appearance at the meeting, Sink said the state figures to borrow $12 billion in the next 10 years, while cities and counties might issue about $200 billion in bond issues, and that even more bonding would be necessary if a major hurricane hits a big population area.

Sink said bond markets get nervous when governments cap their revenue-growth potential. If Florida bonds are downgraded, she said, it could cost state and local governments billions of dollars in higher interest rates.

The tax commission will meet April 24-25 to finalize its already-adopted recommendations. It may schedule a meeting before then to act on some proposals that did not reach a vote Monday.
The "remote" sales tax idea has been pursued for many years by Florida businesses, who feel they are at a disadvantage because they have to collect the 6 percent statewide sales tax that out-of-state companies don't bother with. Commission member Randy Miller, a lobbyist for the Florida Retail Federation, sponsored the proposal for Florida to join 22 states in a multi-state pact to collect sales taxes on Internet, mail-order and sales by phone.

"This is a no-brainer," said Miller. "We're treating out-of-state companies better than our won residents. It is fundamentally unfair."

The commission voted 17-6 for his proposal, giving it just enough votesto make the ballot.
If approved by voters, the proposal would require the Legislature to join the interstate pact. It would still require action by Congress to make "remote vendors" remit the sales tax to states where they don't have a business operation, Miller said.

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