Lawmakers underline concerns with ‘unrestricted’ local Communications Services Tax

Collage of Internet, communications and network equipment with pictures of data transfer by optical fiber information technology and telecommunication tower with radio panel antennas and outdoor remote radio units. Concept of data and mobile information te
There are few restrictions on how local governments can use CST funds.

Lawmakers are taking a closer look at how local governments are spending revenue from the Communications Services Tax (CST).

The CST is a charge added on any cell, landline, cable and satellite television; or video and music streaming service bill. Florida’s CST rate is the 12th highest in the nation, largely due to local governments levying additional tax increases on top of the state CST rate. Despite this, CST tax revenue collected by local governments have few restrictions on what the funds can be used for.

In the Senate Finance & Tax Committee on Wednesday, a workshop on CST drew questions from Senators considering whether guardrails should be put in place to direct local CST revenues back toward local infrastructure projects and network upgrades.

Last month, the House Ways & Means Committee also held a workshop on CST, where House members expressed concerns over the high rates and lack of guard rails.

“It seems pretty unrestricted,” Sen. Travis Hutson said during the workshop.

Sen. Jim Boyd added, “I was under the impression, perhaps, mistaken impression, that a Communication Services Tax ought to be devoted to that which it is called – providing better services for communications.”

Committee Chair Blaise Ingoglia stressed that there will be ongoing needs to invest in local broadband infrastructure.

“Infrastructure is aging, no matter what we do, it’s always going to age and it is always going to need to be replaced or upgraded,” he said.

When asked by the committee if counties would be in favor limiting the tax revenue to only fund public safety and infrastructure needs, Bob Mckee of the Florida Association of Counties said, “We do appreciate the flexibility that we have.”

Last Session, lawmakers took a first step to rein in the CST by including in the tax package a moratorium on local governments from increasing their portion of the CST rates for the next three years. Now, lawmakers are considering how they can further reduce this tax burden on Floridians.

481 local governments (cities and counties) currently levy a local CST, ranging from 0.3% to 7.7% on top of the state rate of 7.44%.  In the last 5 years, 113 local jurisdictions have increased their local CST rates a combined 134 times.

The pause on local CST rate increases included in the 2023 tax cut bill was supported by several organizations including Associated Industries of Florida, the Florida Chamber of Commerce, and nonpartisan government watchdog Florida TaxWatch.

Lawmakers originally sought to set the state’s CST rate at 6% — the same rate as the statewide sales tax — but the provision that made it into the package was scaled back. According to staff analysis of last Session’s bill, that 1.44% reduction would have saved Floridians $168.75 million in aggregate.

The presentation is available on the Florida Senate’s website.

Staff Reports


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