A legislative test

Published: Tuesday, April 1, 2003 at 6:01 a.m.
Last Modified: Monday, March 31, 2003 at 9:38 p.m.
Florida legislators don't like it when critics suggest that Tallahassee lawmakers subject themselves to the same Florida Comprehensive Assessment Test (FCAT) that students must take.
So how about giving legislators the LCAT? That's short for "Legislative Comprehension and Accountability of Taxes." Specifically, it's a little written exam that asks one question:
There are some 300 exemptions in the Florida Tax Handbook for sales taxes. Briefly explain why they are there. If you believe they are justified, state in 10 words or fewer why each should remain.
Oh, the answers would be interesting. Coming up with reasons why the charter fishing industry shouldn't have to pay sales taxes ought to be a doozy.
It might be exempt for "economic development" reasons, but when customers shell out $300 or more for a charter trip, what's another $18 to help Florida? Charter fishing customers avoid paying $38 million in sales tax each year.
But that's not the loophole in the legislative sights right now. One exemption the Legislature can't seem to justify is a sales tax exemption on ostrich food, which appears to be one of the few loopholes that will be closed this session.
Taxing ostrich food won't bring in but $15,000 to $30,000 a year - a long way from filling the $4 billion deficit hole the Legislature finds itself facing.
Florida TaxWatch, a business-driven, non-profit watchdog group, thinks the Legislature should be talking real money.
In a recent report on sales tax exemptions, TaxWatch's cost-savings task force and the Center for a Competitive Florida task force said more than $1.3 billion in revenue could be generated if the state would eliminate exemptions in the sales tax code.
The report didn't say which ones should be closed. It left that decision to legislators.
But it did suggest three simple criteria for eliminating tax breaks. The exemption should go if it: 1) is structural and/or would result in double taxation, 2) isn't for one of life's necessities, such as groceries or 3) isn't needed for economic development.
Of more than 300 exemptions in the sales tax laws, "TaxWatch's Center for a Competitive Florida identified more than 120 exemptions and several exclusions worth more than $1.3 billion annually that did not meet these three criteria," said TaxWatch President Dominic M. Calabro.
Examples abound: Dry-cleaning and laundry services, $78 million; beauty and barber-shop services, $65 million; entertainment and sports services, $219 million; subsidies for sports teams, a golf hall of fame and a game fish world center, $20 million; and bottled water, $9 million.
(Exemptions have been written into the law for many reasons over the years. Who, for example, wants to repeal the exemption on the purchase of American flags? Some things that make sense in tax policy terms aren't feasible politically.)
The Legislature evidently isn't going to go there - even though the governor's budget recommends cutting back juvenile-justice prevention programs, dismantling the state library and cutting back on many valuable services.
Moreover, the Legislature could be ready to expand gambling - rather than eliminate sales tax exemptions - as a way to raise revenue.
House Speaker Johnnie Byrd said he's opposed to the gambling idea as well as taxing more items. The state, he said, does not want to "take any more money out of the private sector and put it in the public sector."
Gov. Jeb Bush told a reporter he equates tax reform with a tax hike: "In my world, that should be the very, very, very, very last option."
TaxWatch Chairman-elect Hoyt R. "Barney" Barnett of Lakeland, vice chairman of Publix Super Markets Inc., has a different view: "The streamlined sales tax project is about basic fairness to our citizens, to our merchants and to the future economic health of Florida."
Barnett said the multi-million-dollar leak "is growing rapidly every year. If something isn't done to plug it, Florida state and local governments will be forced to raise taxes just to keep revenues level. That's something that Floridians will not and should not stand for."
Well into the legislative session, lawmakers have made progress on eliminating only one exemption that would generate a maximum of $30,000.
One leak plugged. An entire dam full of them to go.

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