Tax Exemptions on Budget Radar Senator Wants Loopholes to Go

By Saunders, Jim | The Florida Times Union, November 19, 2001 | Go to article overview

Tax Exemptions on Budget Radar Senator Wants Loopholes to Go


Saunders, Jim, The Florida Times Union


Byline: Jim Saunders, Times-Union staff writer

TALLAHASSEE -- When Florida farmers buy feed and seed, they should thank state lawmakers.

So should people buying eyeglasses, church members buying Bibles and football fans going to Florida-hosted Super Bowls.

For decades, lawmakers have threaded the state's tax system with exemptions that allow businesses and consumers to avoid paying billions of dollars in sales taxes. The exemptions are big and small, affecting everything from shoppers buying food in grocery stores to commercial fishermen buying crab bait.

Often, lawmakers approved the exemptions to the state's 6 percent sales tax at the request of politically powerful industries and lobbyists.

"There are literally hundreds [of exemptions] that could be and should be closed and are only there because someone at the time had personal clout as a legislator, or a lobbyist had a burr under the saddle," said Senate Majority Leader Jim King, R-Jacksonville.

But now, with the state in the middle of its worst budget crisis in a decade, Senate President John McKay has proposed a controversial plan that could lead to eliminating billions of dollars in exemptions.

McKay wants to ask voters next year to approve a constitutional amendment that would close exemptions. The proposal, which is part of an effort to head off future budget problems, also calls for lowering the overall sales-tax rate to 4 percent and making it harder for lawmakers to add exemptions in the future.

"They need to be based on principle and not politics," said McKay, a Bradenton Republican.

McKay announced his plan last week, though he did not detail the exemptions that he wants to close. He said, for example, that he thinks consumers should continue being able to avoid paying sales taxes when they buy necessities such as groceries, drugs and health-care services.

But the plan likely will be fought heavily by industries that have enjoyed the tax savings for years. Among others, the Florida Farm Bureau argues that farmers cannot absorb the costs of paying sales taxes on items such as seed and feed.

"Unlike others in the marketplace, farmers can't pass it [costs] on," said Jacksonville nurseryman Carl Loop, the longtime president of the Farm Bureau.

McKay estimated that Florida loses out on $23 billion a year in potential sales taxes because of exemptions -- more than the $17 billion it actually collects in sales taxes.

Supporters argue that eliminating the exemptions would make the tax system more stable and help ease the state's reliance on the tourism industry for sales taxes. The current budget crisis stems, in part, from a downturn in tourism after the Sept. 11 terrorist attacks.

Some of the exemptions go back as far as 1949, while others, such as an exemption on the sale of Jacksonville-produced Dasani bottled water, were passed as recently as May. Often, lawmakers passed the exemptions with little notice or tacked them on to crucial bills that could not be vetoed.

Former Senate Appropriations Chairman Jim Horne, R-Orange Park, passed the $750,000 exemption for Dasani in the final hours of this year's legislative session. Horne, who now is the state's education secretary, argued that the change was necessary to clarify a law that allowed other types of bottled water to go untaxed. …

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