Proposed cut could save consumers $2.1M in state communications taxes, more in local taxes

Some lawmakers are looking to lower taxes for phone, video and audio services with a plan to save Floridians millions of dollars. 

A Florida customer buying phone service or video or audio streaming services pays state Communication Services Tax (CST), local CST and gross receipts tax. Proposed legislation (SB 1174/HB 701) would drop the state CST rate, 4.92%, to 4.9% while dropping most local rates. 

The combined Florida CST rate, with gross receipt and state taxes, is currently 7.44% — which doesn’t count varying local taxes. Florida last dropped its CST rate in 2015.

The legislation would cap local rates at 5% next year, making the effective maximum statewide rate 12.42%. But in 2022, the state would mandate a 4% rate, if any, for municipalities and charter counties and 2% for non-charter counties. 

The state CST change would save Florida consumers $2.1 million at the state’s expense, budget experts agreed Friday. But the Department of Revenue (DOR) punted its estimated cost of the local CST change to next Friday’s budget conference. 

Of the state’s 482 taxing jurisdictions, mostly municipalities and counties, 358 have adopted CST rates above 5%. Some municipalities, including Bay Lake and Lake Buena Vista, have no local CST rate, while Sanford charges the highest, 7%. 

The bill would prevent local jurisdictions whose local rates were 5% or lower by the year’s opening from raising them. Jurisdictions with rates above 5% must adopt rates below the threshold by September 1 to go into effect next year. 

The Florida League of Cities opposes the legislation, according to a December agenda. Palm Coast Republican Sen. Travis Hutson and Jacksonville Republican Rep. Jason Fischer filed their respective chambers’ bills.

Service sellers generally collect necessary taxes, but consumers must still pay taxes, including CST, if the business doesn’t collect it. DOR distributes local CST to the appropriate jurisdiction. 

The legislation also clarifies that digital video rentals and subscription services are on the list of taxable services.