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Florida Must Stop Shifting Its Tax Load To Businesses

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The Tampa Tribune

Published: September 14, 2008

For several years, elected officials at every level have been promising big tax cuts. Voters, when finally given a chance to weigh in on the issue in January, overwhelmingly approved an amendment that was part of what Gov. Charlie Crist called the largest tax cut in Florida history.

If it was a joke, the state's businesses aren't laughing.

The homestead exemption did go up, and taxes on most homes did fall a little. But guess what is happening to local businesses. Their taxes are going up, and for many of them, going up fast.

Higher property-tax bills are due even though sales have slowed, as reflected in surprisingly lower sales-tax revenues statewide. The Legislature deserves the blame for refusing to provide tax help to the state's businesses, even those struggling to survive.

If Florida wants a reputation as a business-friendly state, it needs to begin taxing its businesses with more fairness and less uncertainty. The result of doing nothing could cause the bottom to fall out, just like it did in the housing market.

Three examples illustrate the tax pain felt by Hillsborough's businesses.

At the suburban intersection of Lumsden Road and Kings Avenue in Brandon, everything looks the same as last year. Yet the total property taxes collected from the convenience stores, shops, and offices there this year is up 9 percent. The two shopping strips owe 11 percent more. Even the owner of a tract of undeveloped land on one corner must pay more.

In Tampa, the story is similar. For businesses near the corner of Dale Mabry Highway and Kennedy Boulevard, property values were up about 3 percent, and average taxes are up nearly 5 percent. The tax on a book store is up 14 percent.

At the urban corner of Ashley Drive and Kennedy, the four big office buildings there are together paying 10 percent more than last year. Their extra $326,000 in taxes, along with the millions more taken from businesses countywide, will help local governments and taxing agencies avoid big budget cuts.

Few homeowners can see the entire picture. Their individual tax notices tell many they're saving a small amount. They also see that governments are not being forced to cut core services in any visible way. These homeowners can't be blamed for demanding even lower taxes.

But the Legislature's first priority should be businesses.

While increases in the value of homesteads are capped at 3 percent, the taxable value of all non-homestead properties in the county is up 7 percent this year, from $23.5 billion in 2007 to $25.2 billion in this year, says Tim Wilmath, director of valuation for the Hillsborough County Property Appraiser.

A 10 percent cap on increases in taxable value of non-homestead property will apply next year, but won't help this year, and in any case, 10 percent is too high. Five percent would provide adequate revenue and less of a shock to business.

It's a good economic sign that the value of business property is still going up. But it's hard to see the wisdom in raising the taxes on a book store 14 percent at a time when it must compete with Internet booksellers who don't even collect Florida sales taxes.

The appointed Taxation and Budget Reform Commission failed in its mission. It tried to put a controversial tax reform proposal on the November ballot, but a judge correctly ruled that the question was too complex and misleading.

Amendment 5 would have eliminated the state's portion of property taxes for schools, which would have lowered taxes for every property and thus reduced inequities. But the amendment was flawed in a number of ways, primarily in leaving it up the Legislature how to deal with the lost revenue.

Businesses were right to fear that the state would end up with a tax system that would discourage economic growth. Teachers were right to worry that education would soon suffer.

Next year, the Legislature can stop short of fundamental tax reform and still do a lot of good. It can stop increasing the property tax rate for schools, put a 5 percent cap on increases in the taxable value of non-homestead property, and join a multistate effort to tax Internet sales. Continuing to quietly shift the tax load to businesses will chase new jobs away. And wherever jobs go, homebuyers will follow.

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