Dems grill GOP sponsor on legislation exempting heavy equipment from ad valorem tax
Anna Eskamani. Image via Colin Hackley.

The proposal would alter the way rentable heavy equipment is taxed.

Reps. Anna Eskamani and Carlos Guillermo Smith hammered into several pieces of GOP-sponsored tax legislation Monday at the House Ways and Means Subcommittee, including one measure that seeks to change how heavy equipment is taxed in Florida.

The measure that received the most scrutiny from Democratic lawmakers at the meeting was HB 751, sponsored by Rep. Chuck Clemons, a Newberry Republican. The proposal would alter the way heavy equipment is taxed by local municipalities.

The legislation would reclassify construction equipment available for short-term rental as inventory, which is exempt from an ad valorem tax. Currently, such equipment is assessed as tangible property, which allows it to be taxed annually via the state’s ad valorem tax. Clemons said this legislation will fix the “glitch” presented by current law, with the government already seeing revenue from sales tax each time the item is rented or sold.

Clemons also argued the way heavy equipment is currently taxed has led to shortages and delays in those items, which are crucial after natural disasters, because large companies move rental equipment out of state in order to avoid the annual ad valorem tax.

“One of the reasons for this sort of shortage is what I believe is a glitch in the way that we tax heavy equipment in the state of Florida,” Clemons said. “The glitch places Florida-based companies, the ones that are housed here, at a disadvantage because they can’t move their equipment out of state because they have no place to put it to make sure that they don’t get levied that tax.”

The legislative analysis estimated that about $20 million would be lost in fiscal year 2022-23, spread among the state’s municipalities, by enacting this bill. That number is estimated to increase to $23.4 million in the next year, according to the analysis.

Chris Moya, representing the American Rental Association, said about 113 Florida businesses would benefit from this legislation, as would four or five large corporations with storefronts all across the state. United Rentals, for example, has nearly 80 stores in Florida alone. However, it is unclear how the cost is spread among each business.

Some Democratic lawmakers expressed concern over the loss of funding for municipalities across the state, as well as the potential the proposal has to provide tax breaks to larger corporations.

“Your point in wanting this tax break specifically for a very niche industry that is quite profitable is because some are evading their tax liability by apparently moving their heavy equipment out of state? Which I would want to see evidence for,” Eskamani said.

Eskamani went on to suggest that instead of providing a tax break to such corporations who are moving equipment out of state to avoid the ad valorem tax, officials should hold them accountable.

“If you’re trying to protect those sort of Florida-based businesses only, then why not hold those big actors who are exploiting a loophole accountable versus a tax break across the board, which the big guys would still benefit from and our small governments and local governments are the ones that at end the day lose out?” Eskamani asked.

Smith also questioned Clemons, asking if he would be open to an amendment that would narrow the bill to benefit local businesses rather than large corporations.

“If you narrowed the bill to include small businesses only and not the larger ones, wouldn’t that bring back the inventory that’s being moved out of state because they’re going to pay the tax regardless? And then also make sure that those smaller businesses have heavy equipment in their inventory here in the state are not overly taxed?” Smith asked.

However, Clemons argued that he does not want the legislation to discriminate against companies based on profit.

“It’s not about big or little,” Clemons said. “I’m not for any sort of discrimination in this sort of tax relief based upon a company’s profitability, or how large they may be, because I just think that discrimination of any kind is bad.”

Rep. Stan McClain, an Ocala Republican with experience in construction, asserted the bill would ultimately save money for customers — Floridians — who rent the equipment from companies since the companies pass the added cost of taxes down to the consumer.

“What’s always interesting in these conversations, we always get caught up between the big guy and the little guy and this and that and who’s doing this and who’s doing that,” McClain said. “The last person is paying and so anytime we can offer tax breaks to the citizens of the state of Florida, I’m all in.”

But Eskamani held that the legislation won’t guarantee that customers save money.

“I appreciate the notion that we are trying to allow this savings to go to consumers, but there is nothing in the bill that requires that,” Eskamani said. “We’re talking about companies who have shareholders whose entire model is profit-driven and we can’t ignore that when it comes to a tax break.”

The legislation cleared the committee in a 14-3 vote, with Eskamani, Smith and Tampa Democratic Rep. Dianne Hart dissenting.

The House legislation only has one more committee to go before it can be heard by the full chamber. No Senate companion bill has yet been filed.

Kelly Hayes

Kelly Hayes studied journalism and political science at the University of Florida. Kelly was born and raised in Tampa Bay. A recent graduate, she enjoys government and legal reporting. She has experience covering the Florida Legislature as well as local government, and is a proud Alligator alum. You can reach Kelly at [email protected].


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