Peter Schorsch
As the 2016 Legislative Session enters its final week, lawmakers in both the House and Senate have scrambled to hammer out details the state’s $80 billion-plus budget.
Needless to say, things get more than a little hectic before Friday’s anticipated Sine Die. And when things get busy, things get overlooked.
For example, nestled within this year’s proposal – something heavily endorsed as a “tax cut” budget – lies a proverbial wolf in sheep’s clothes, a Trojan horse of a tax increase sneaking its way in.
Over the past few years, Florida’s Department of Business and Professional Regulation has been under fire for inconsistently applying an unexpanded tax on “Other Tobacco Products” (OTP). This persistent conflict forced the Florida Association of Wholesale Distributors (FAWD) to successfully file suit, which is currently under appeal by the state. The FAWD action is one of at least a dozen similar court cases throughout Florida.
What the FAWD advocates in 2016 is a legislative “fix” to HB 7099, which unanimously passed Senate Appropriations Thursday. The bill seeks to clarify current practices and redefine the term “wholesale sales price” to include several factors: the cost of materials, labor and service, transportation and delivery charges, the Federal Excise Tax (FET) and any other fees associated with a sale.
At particular issue is an attempted link between state and federal taxes.
The bill’s current language requires the State Excise Tax (SET) to apply to FET, if that tax is not included in the full price of the product. However, expanding this tax essentially creates a new excise on businesses collecting tobacco taxes on behalf of the state. Critics believe that tying SET to the FET alone is clearly inappropriate. In effect, the bill would tax businesses instead of the product; something the state enforces both inconsistently and selectively.
When challenged, the DBPR has issued refunds. But then, when companies drop prices to remain competitive, the agency stops delivering refunds, and began demanding back taxes.
While this particular taxation is complicated, for the FAWD, the question at hand is not.
Last year, tFAWD was successful in removing such “codifying” language, but is now facing a new tax on businesses, not just “Other Tobacco Products.”
In other words: as part of a “tax cut budget,” this is anything but. It even led Clearwater Republican Sen. Jack Latvala to take to Twitter in protest.
“Hard as it is to believe there is actually a tax increase in @mattgaetz so-called tax cut bill!” Latvala tweeted.
According to the Revenue Estimating Conference, HB 7099 increases revenue by $2.4 million – a figure confirmed by state economists to Gov. Rick Scott. But the FAWD estimates the actual increase would be closer to $5 million.
While there are several reasons this policy could be considered inappropriate, including a tax increase in what is touted as a “tax cut budget” is truly disingenuous.
And it is also why so many are fed up with government, says the FAWD.
For a while, the issue was considered dead for 2016, since many in the industry believed the language would not be included in Tuesday’s budget package – except that the wording mysteriously reappeared in Thursday’s Appropriations meeting. Which proves one thing – in Tallahassee, nothing is ever really dead until Sine Die.
