TALLAHASSEE, Fla. -- Would you agree to pay higher sales taxes in exchange for lower property taxes? How about an education surtax of 3 percent in exchange for no school property taxes?
That's one idea state lawmakers will tackle during the annual legislative session starting next week.
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A proposed bill would raise sales taxes 3 percent and, at the same time, eliminate school property taxes.
In Duval County the median tax assessment on a home is $105,000. With a $25,000 exemption, school taxes would be $604 a year. The additional sales tax would cost the average homeowner about $550, based on the average household income of $46,000 in Duval County.
Rep. Fred Costello of Ormond Beach is pushing the idea, calling the sales tax hike an "education surtax."
He said he believes the tax reform idea would be revenue neutral for the state. Costello thinks lowering the school-taxes portion of property tax bills would offset what homeowners would pay in higher sales taxes.
Retailers don't support the bill.
Rick McAllister, spokesman for the Florida Retail Federation, said it would force the state to rely heavily on sales taxes and that creates a big risk if the economy turns sour.
Plus, he thinks raising the sales tax to around 10 percent would deter people from buying certain things, especially more expensive items.
"There's no question that at some level people will buy what they have to buy. But on those things that they don't have to buy, when you add another 3 cents, let's say to make ... the sales tax 10 or 11 percent, it's going to have an effect on spending."
Curtailed spending could have a domino effect, depressing the economy and reducing tax collections for the state, he said.
McAllister also raises the age-old concern about raising sales taxes because they are regressive and impact poorer people disproportionately.
Jacksonville University professor of economics Rody Borg agrees. "Sales taxes are clearly regressive in nature. Lower income people pay substantially higher percentages of their income in sales taxes than do upper income people; also upper income people invest more of their dollars in property."
Borg adds, "The consequences of this move would indeed make it even more highly regressive. Personally, I think it is a ridiculous idea."
The Florida School Boards Assoc. also opposes the bill. Spokesman Wayne Blanton said relying mainly on sales taxes to pay for education and other state services would be bad policy.
"If you go only to one source of revenue I believe it's very dangerous. Most states have sales tax, property tax and a state income tax. Florida's revenue is derived from a sales tax and a property tax. If you went to only a sales tax, I think you would see a lot of fluctuations in local government as to how much money is actually coming in and I think it would be a real difficult thing to adjust to on a regular basis."
Blanton points out sales taxes can fluctuate widely based on the economy and that would make it harder for schools to plan from year to year. That problem was highlighted after the 9/11 attacks.
"If you look at what happened after 9/11, tourism dried up in Florida and that alone drove millions and millions of dollars out of the state revenue and the state economy so you have to be very sensitive to things like that."
One of the challenges similar plans have faced in the past is that only property owners would benefit from the tax shift. Floridians who don't own property would end up paying higher sales taxes but get no benefit from the cut in property taxes.
First Coast News