Florida Taxation Issues Finance & Taxation Committee Tax & Budget Reform Commission October 4, 2007 Vicki Weber, Hopping Green & Sams P.A. Tax Consultant, Florida Chamber of Commerce

Florida Chamber 139,000+ Member Businesses 3 million+ Employees 80%+ Small Businesses

Member concerns Tax Competitiveness Recommendations

Member Concerns: Property Tax Member Concerns: Property Tax 97% experienced tax increases 81% more than 10% increase 67% more than 20% increase 85% tax growing faster than revenues

Member Reactions to Tax Increases Member Reactions to Tax Increases Reduce employee benefits (health care) Cut inventory or cut or freeze hiring Raise prices/lower profits Shelve expansion plans Decrease advertising Sell rental property Leave Florida

Member Requests Member Requests Halt rate of tax/spending increases Fix inequities across taxpayers Address unpredictability of taxes Make assessments more consistent with income that can be earned on property Address SOH lock in Address shifting of tax burdens

COST Report on Business Taxes COST Report on Business Taxes Council on State Taxation Non-profit trade association 550 multi-state corporate members Founded by Council State Chambers Florida Chamber of Commerce Member E&Y “Total State and Local Business Taxes”

COST Report COST Report What are total taxes business pays the state? How are current state and local business taxes affecting the state’s economic competitiveness?

Business Taxes as % of Private Sector GSP FY 2005 Florida5.4% Georgia 4.0% Alabama4.2% South Carolina4.4% North Carolina3.7% U.S. Average4.8%

E & Y Report “Property Taxes on Business Capital” E & Y Report “Property Taxes on Business Capital” Competitiveness Index—Measures property tax relative to estimated net stock of business structures and equipment.

Competitiveness Index Florida1.02 Georgia.90 Alabama.61 South Carolina1.27 North Carolina.72 U.S. Average1.00

Recommendations Recommendations Comprehensive property tax reform Property Taxpayer Bill of Rights Support streamlined sales tax No automatic sales or services tax

Property Tax Affordability Property Tax Affordability * Reasonable statutory rate caps for across-the-board relief. *Address SOH re-distribution and “lock-in” problems.

Property Tax Affordability Property Tax Affordability Address “highest and best use” valuation standard so property owners are not subject to taxes that are grossly disproportionate to income that can be earned on the property.

Property Tax Affordability/Simplicity Property Tax Affordability/Simplicity Provide relief to business/rental property owners by providing exemption for tax on tangible personal property.

Property Taxpayer Bill of Rights Presumption of Correctness Burden of Proof Uniformity in Assessment Criteria Value Adjustment Board Improvements Interest on Overpayments Attorneys Fees

Streamlined Sales Tax Project Florida should become a full member of the Streamlined Sales Tax Project and encourage the Florida Legislature and Congress to approve necessary implementing legislation.

Expansion of the Sales Tax Base No objection to reviewing exemptions and exclusions from tax Crossroads Study encouraged broad base and low rate

Concerns Related to Expansion of the Sales Tax Base: Automatic Taxation Taxation of Business Inputs

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