TALLAHASSEE, Fla. – March 22, 2007 – House Republican leaders have sweetened their pitch to replace property taxes with an increase in sales taxes: Give homeowners the choice of higher sales taxes in their county in exchange for having their property tax bills disappear.
The proposal is part of a new version of the tax overhaul being pushed by House leaders. Along with the choice comes this bottom line: If voters agree to swap local sales taxes for property taxes, they’ll pay no more property taxes. If they don’t agree, they’ll pay an average of 45 percent less in property taxes beginning in the 2008 tax year.
The new plan would still raise sales taxes statewide, but only by a penny, not the previously proposed 2 1/2 cents. But the plan would let counties raise local sales taxes by as much as 1 1/2 cents more – if local voters approve – to make up for major cutbacks on property taxes. The measure would force local governments to cut $5.5 billion statewide by 2008.
“There isn’t a one-size-fits-all solution,” said House Speaker Marco Rubio, who spoke with reporters Wednesday about the new version. “We produced a basic concept of sales tax in lieu of property tax; we figured out the shortcomings and we addressed it.”
Among the problems House leaders want to fix: Complaints by large counties that the original proposal of raising sales taxes statewide might send money raised in one county to another smaller, poorer county.
The new proposal also softens the blow to local governments, forcing them to reduce tax collections based on the 2003-04 budget year, rather than going back to 2000-01, which would mandate deeper cuts. By giving voters the option of raising their local sales taxes – and having counties distribute the money to their cities based on existing formulas –lawmakers resolve the problem of having to distribute the money, said Rep. Ray Sansom, a Destin Republican and head of the House property tax effort.
House Democratic Leader Dan Gelber said he was encouraged that House Republicans have shown a willingness to modify their plan to fix weaknesses, but he has some questions.
“I’m not convinced the numbers add up,” he said. “I think it’s clear we’re still at the drawing board with these plans.” The new House Republican plan, which will be voted on in the House Policy and Budget Committee on Friday, would still require a constitutional amendment, which would have to be approved by 66 percent of voters. It would work this way:
- Local spending: Local governments would be forced to cut their budgets an estimated $5.5 billion in 2008, and property taxes would have to be rolled back based on the 2003-04 budget year. Hospital taxing districts, children’s services councils and poorer counties would be exempted from the rollback. Counties could exceed revenue caps only by a unanimous vote of their commissions. In the future, spending would be capped based on the consumer price index.
- School taxes: Homestead property owners would see the portion of their property taxes that pay for schools disappear – a savings of as much as 40 percent for owners of most primary homes. The state would replace that money by raising the state sales tax one cent and distributing the $3.9 billion collected to all 67 counties, based on the existing school funding formula. Owners of commercial and non-homestead property would continue to pay property taxes for schools, but the tax bill would shrink because of the rollbacks.
- Optional school taxes: Counties can now levy a separate tax that goes to schools. Under the new plan, counties would have until 2010 to ask voters to that tax with a half-cent increase in the local sales tax.
- Local taxes: Counties would have until 2010 to ask voters to eliminate all property taxes on primary homes and replace the money with a one-cent increase in the local sales tax.
- Rental property: Counties could be required to pass on tax relief to owners of rental property, though there is no requirement that the savings be passed on to renters.
- Businesses: Commercial-property owners would receive a tax break of $25,000 of tangible personal property paid on certain equipment, such as shelving.
The latest proposal is a variation of a plan first promoted by Republican House leaders three weeks ago, but this is the first time it has been offered as formal legislation.
Rubio has faced resistance from some Republicans, who worry about the wisdom of voting for a tax increase. On Wednesday, Sen. Mike Haridopolos, who is leading the property tax effort in the Senate, said the general House idea of replacing property taxes with sales taxes “doesn’t have the support necessary to carry the day.”
Haridopolos said Senate leaders are taking their time to release their proposal because they want to understand the impact a rollback in government revenue will have. House Democrats have proposed their own alternative, attempting to give selective property tax relief to lower- and middle-class homeowners.
Copyright © 2007 The Miami Herald, Mary Ellen Klas. Distributed by McClatchy-Tribune Business News.
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