Appellate court rules state communications tax unconstitutional
Florida's 1st District Court of Appeal

1stDCA

Thursday morning the 1st District Court of Appeal in Tallahassee ruled that the state’s “communications services tax” — currently undergoing revision in the Legislature’s budget talks — is unconstitutional.

Judge L. Clayton Roberts, writing for the majority in a 20-page opinion, ruled that the CST contravenes state law because it unfairly favors cable providers in Florida and discriminates against satellite television providers, whose operations are largely based outside the state, violating the U.S. Constitution’s Commerce Clause.

“A state law is discriminatory in effect if it affects similarly-situated entities in a market by imposing disproportionate burdens on out-of-state interests and conferring advantages upon in-state interests,” Roberts wrote.

“Here, the sales tax portion of the CST is discriminatory in effect because it affects similarly-situated entities, cable and satellite companies, by imposing a disproportionate burden on satellite service and conferring an advantage upon cable services, which use in-state infrastructure.”

The ruling introduces a vexing new wrinkle into the Legislature’s plans to include a cut to the CST as part of the House’s tax cut package. The House originally wanted more than $600 million in cuts to state fees and taxes; the Senate included $253 million for the future revenue reductions.

The matter is now considerably more complicated.

The Legislature cannot enact provisions related to any law found to contradict the Constitution.

Judge Simone Marstiller issued a dissenting opinion in which she wrote that there is no discriminatory purpose inherent in the CST law.

“I do not agree the satellite and cable providers are similarly situated entities for purposes of dormant Commerce Clause analysis; in my view, the majority opinion fails to fully consider all the differences between the two,” Marstiller wrote the lone dissenting opinion.

Noting that although cable companies rely “on local rights-of-way and employment of Florida workers as in-state economic interests,” both industries have employees and substantial investment in Florida-based operations.

The House and Senate are slated to vote on a final budget on June 19.

Whether it will include general revenue funds to backfill a loss in projected revenue stemming from the CST for next fiscal year — or whether it will proceed on the basis that tax will remain in effect despite the adverse decision — remains to be seen.

Speaker Steve Crisafulli told press on Thursday afternoon he was aware of the ruling, but had not yet been briefed on it.

Ryan Ray

Ryan Ray covers politics and public policy in North Florida and across the state. He has also worked as a legislative researcher and political campaign staffer. He can be reached at [email protected].



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