The Florida House officially coupled a plan to collect online sales tax at the point of sale with slashing Florida’s commercial rent tax in half.
The House took up the Senate version of the bill (SB 50), which calls for all revenue generated by the tax to be used to replenish the unemployment compensation trust fund until it reaches pre-pandemic levels. The depletion of the trust fund this year forced an automatic hike in rates, and House analysts say rates could go up again by as much as 700% on some businesses.
But the lower chamber also added an amendment to use money raised after that point to cut the commercial rent tax by 50% once the trust is refilled. Rep. Chuck Clemons, a Newberry Republican who championed the online sales tax in the House (HB 15), introduced the amendment, which implements a plan negotiated by House Speaker Chris Sprowls and Senate President Wilton Simpson.
Florida is currently the only state that charges a commercial rent tax. That change is supported by the bill’s Senate sponsor, Sen. Joe Gruters, a Sarasota Republican.
Rep. Chip LaMarca, a Lighthouse Republican who co-introduced the bill, said he has spoken with restaurant owners in his district that have long decried the rent tax.
“This specific issue has been brought up so many times,” he said. “This would enable them to bring on new employees and expand their businesses.”
For decades, there was legal debate about whether states could force online retailers to charge sales tax, which differ state-to-state. The U.S. Supreme Court in 2018 settled that matter, ruling in South Dakota v. Wayfair that states do have that right. Since then, 43 of 45 states with a sales tax began requiring the tax to be assessed. Florida and Missouri remain the only outliers.
Clemons noted on the floor that Floridians already are required to pay sales tax on online purchases, though few do. Consumers are expected to pay tax directly to the Department of Revenue.
Still, the House in years past has been reluctant to hear the issue as it in effect will result in more individuals paying taxes. But the unemployment crisis, coupled with a rush of consumers to online purchases during the pandemic, drove the issue forward this year.
Revenue estimators say it could generate nearly $1 billion in revenue next year alone. Clemons and others have argued for years it’s only fair online retailers collect sales tax the same as brick-and-mortar shops, and the shift in customer habits to the online market amid the pandemic only makes the discrepancy more dire.
Critics of the bill, even those who support collecting the sales tax, expressed frustration that as the House and Senate debated details, it ended up earmarking all revenues for, essentially, other tax cuts.
Rep. Carlos Guillermo Smith, an Orlando Democrat, said he’s otherwise a fan of collecting the tax.
“I was under the impression we would use a billion to help the same consumers that were paying it,” he said. “What the underlying bill does is… we are collecting taxes on consumers and then we are giving all of the spoils and all of the benefits over to businesses and employers.”
Smith and Rep. Anna Eskamani, an Orlando Democrat, filed a variety of amendments calling for the revenue instead to be used to reduce sales tax, dedicate dollars to affordable housing and sustainability and resilience programs, or increase weekly unemployment benefits. All failed.
The legislation must still be voted on in the House on third reading. The Senate already passed this bill, but must vote on the amended language again should it pass the House in its current form.