Cabinet approves rules to lower business rent tax

UF researchers say survey shows Sunshine State consumers are warming to economy. Stock image via Adobe.

The Cabinet has approved new rules to administer a cut on the sales tax on commercial leases, or business rent tax, from 4.5% to 2%.

The cut was long ordained. Lawmakers passed a measure to cut the tax from 5.5% to 2% in 2021, with the cut triggered when the unemployment insurance trust fund, which was depleted by the COVID pandemic, was replenished to its pre-pandemic level of $4.1 billion. A later measure cut the tax to 4.5% in the interim.

The Department of Commerce announced that the fund had reached that amount on March 21, triggering the cut as of June 1.

New administrative rules, though, are needed to implement the cut, and the Cabinet approved the Department of Revenue’s request with little discussion.

“This reduction in the Commercial Lease Sales Tax is a huge win for Florida businesses, saving them an estimated $1 billion in tax relief,” said Chief Financial Officer Jimmy Patronis in a prepared statement.

“This is especially helpful to small businesses who often do not own their facilities like the big box stores. While Washington will tax and spend you to death, in Florida we work to keep more money in your pocket to help you grow your business.”

Florida is the only state that collects a sales tax on commercial leases. It’s long been a goal of major business groups to trim the tax. As Governor, Rick Scott wanted to phase out the tax completely.

The pandemic disrupted plans to do that in the short term. But with inflation driving Florida’s sales tax revenues up and with federal stimulus funds padding state coffers, there was more leeway to make the cuts — at least as soon as the unemployment trust fund was replenished.

The budget outlook was sunny enough for lawmakers to cut the tax by 1% in 2023 ahead of the reduction planned for this year.