Florida: 2018 session ends with several new tax cuts

Florida Tax Watch, which describes itself as “an independent, nonpartisan, nonprofit taxpayer research institute & government watchdog,” recently issued a wrap-up of the Sunshine State’s 2018 legislative session, which included passage of the $88.7 billion budget and $170 million in tax cuts.

At 4.4 percent, or $3.8 billion more than current spending, the Florida state budget that Gov. Rick Scott signed into law on March 16, 2018, contained $168.6 million in tax cuts, most of which Florida Tax Watch portrayed as “relatively small and narrow in application.” Key enactments in the “mix of one-time ($97.4 million) and recurring cuts ($71.6 million)” include the following:

• A small rate reduction for commercial leases, House Bill 7087, effective January 1, 2019, which reduces the state sales tax rate on commercial leases from 5.8 percent to 5.7 percent.
• A Back to School sales tax holiday, also in House Bill 7087, that provides for a 3-day sales tax holiday, from Aug. 3, 2018, through Aug. 5, 2018. During the holiday, certain items that cost $60 or less, like clothing, footwear, wallets and bags, are exempt from the state sales tax and county discretionary sales surtaxes. It also exempts “school supplies” that cost $15 or less per item during the holiday.
• The Disaster Preparedness Sales Tax Holiday, also in House Bill 7087, provides for a seven-day sales tax holiday from June 1, 2018, through June 7, 2018 for specified items related to disaster preparedness.
• The Florida Sales Tax Credit Scholarship Program for Commercial Leases, House Bill 7055, takes effect on July 1, 2018, and authorizes any tenant that pays a rental or licensee fee that is subject to the business rent tax to make a contribution to a nonprofit scholarship-funding organization, and receive a credit in the same amount to offset the tenant’s sales tax liability.
• Creates a Credit for Contributions to the Hope Scholarship Program for Bullied Students, also in House Bill 7055. The Hope Scholarship Program (HSP) enables the parent of a bullied public school student to transfer the student to a public school within the school district, receive a scholarship to transportation to a public school in another school district, or receive a scholarship for the student to attend a private school. Battery, harassment, hazing, bullying, kidnapping, physical attack, robbery, sexual offense, harassment, assault, battery, threat, intimidation, or fighting at school are types of incidents that apply.
• The corporate income tax piggyback bill, House Bill 7093, takes certain steps relative to the federal tax code, such as updating the Florida corporate income tax code by adopting the Federal Internal Revenue Code (IRC) that was in effect on Jan. 1, 2018. It also requires the state’s Department of Revenue:
  1. To examine how the federal Tax Cuts and Jobs Act will affect Florida’s corporate income tax.
  2. To conduct public workshops.
  3. To submit a comprehensive report.

Beyond this, HB 7093 requires an automatic downward adjustment of the corporate income tax rate for one year if the actual net collections for fiscal year 2018-2019 exceed the forecasted net collections by seven percent, after which any tax rate adjustment would sunset for taxable years beginning on or after Jan. 1, 2020.

Finally, HJR 7001, calling for the requirement of a supermajority vote for state taxes or fees, will put a proposed constitutional amendment before the voters in the November election. If approved, any increases to taxes or fees will require a two-thirds vote of each chamber.

When Florida’s 2018 legislative session concluded in mid-March, the Tampa Bay Times characterized it as the least productive in a decade, “if you count by the number of bills passed.” In the late 1990s, that figure was as high as 500. The piece attributed the slow-down in part to the fact that since the Republican takeover in 1998, legislatures have preferred to limit statutory barriers to individual freedoms, rather than promulgate new laws.

Florida lawmakers focused much of their attention on the the Marjory Stoneman Douglas High School Public Safety Act, Senate Bill 7026, which Gov. Scott signed into law on March 9, 2018. The measure prohibits those under 21, and the mentally ill, from owning a firearm, and imposes a waiting period of either the greater of three days or the amount of time it takes to conduct a background check, among other things.