Is business for property tax cut?
Published: Sunday, January 13, 2008 at 6:01 a.m.
Last Modified: Sunday, January 13, 2008 at 12:00 a.m.
TALLAHASSEE - Ed Chiles should be one of the Florida business owners eagerly embracing the Jan. 29 constitutional amendment that will cut property taxes.
What your vote means
- If the amendment passes:
- * Businesses and some mobile home owners would receive a $25,000 exemption for their tangible personal property. Businesses annually pay the tax on their equipment, furniture, computers and other assets. Some mobile homeowners pay the tax on carports, sheds and other attachments to their property. If passed, more than 1 million businesses would be exempted from paying the tax. The average savings is $450.
- * Non-homestead property owners would be able to apply for a 10 percent assessment cap on their properties. It would be similar but not as stringent as the 3 percent assessment cap enjoyed by homeowners under the state's Save Our Homes initiative. Critics say the 10 percent cap is too high to do much good for many non-homestead properties. Supporters hail it as the first step in giving businesses and other non-homestead properties some protection from excessively high annual assessments.
- If the amendment fails:
- * Businesses and some mobile home owners would continue to pay the tangible personal property tax without any exemptions.
- * Non-homestead property owners would continue to have no limit on their annual property assessments.
But Chiles, who owns three waterfront restaurants in the Manatee-Sarasota area, will vote against the ballot measure because he says it doesn't do enough to help businesses, which have borne the brunt of the shift of property taxes from homeowners to non-homestead property in recent years.
"We're in desperate need of property tax relief. There's no question about it,'' said Chiles, who wants to see a more comprehensive tax reform that would include looking at some of the state's numerous sales tax exemptions. "This package is more of the same. It makes an unfair, inequitable system more unfair and more inequitable.''
There is no doubt the Jan. 29 amendment is tilted heavily in favor of homeowners. They would see their $25,000 homestead exemption bumped to $50,000, although the increase wouldn't apply to school taxes. They would also be able to transfer their Save Our Homes tax savings if they moved.
A new report from the nonpartisan Florida TaxWatch group says 80 percent of the amendment's $9.3 billion savings over five years would go to homeowners.
In crafting the complicated amendment, lawmakers did add a few provisions for businesses and non-homestead property. One measure would provide a $25,000 exemption from the annual tangible personal property tax that business owners pay on their equipment, furniture and other assets. The other measure would create a 10 percent assessment cap on non-homestead property.
Those provisions have been enough for most major Florida business groups to back the amendment. But the support has been somewhat tepid, with most arguing the amendment is the first step in what they see as a series of measures to provide property tax relief.
"These are real dollars back in the bottom line,'' said Bill Herrle of Florida's National Federation of Independent Business, which has sent fliers to business owners across the state urging them to support the amendment. "How is that a bad thing? All they have to do is go out and vote for it.''
The most popular provision has been the $25,000 tangible personal property tax exemption, which would free more than 1 million businesses from having to pay the yearly tax.
Herrle called the tax "an aggravation'' for many small business owners since the cost of hiring an accountant to comply with the tax often exceeds the tax itself. He also said business owners resent the levy since they paid a sales tax on most of their equipment when they bought it, but they are "being taxed repeatedly'' on the same assets through the annual assessment.
Barney Bishop, head of Associated Industries of Florida, one of Florida's largest business lobbies, said his group also strongly supports the exemption, arguing that although the tax break may only amount to an average $450 savings for business owners, it does provide relief.
"It's a step in the right direction,'' he said.
Mobile homes will also benefit from the exemption since owners who lease their land have to pay the tangible personal property tax on carports, sheds and other attachments to their homes.
Charles Gallagher, a mobile home owner in Port St. Lucie and the president of the Federation of Manufactured Home Owners of Florida, said while some of his members have expressed skepticism over the savings, his association's leadership is urging their support for the Jan. 29 initiative.
"It's only a win-win situation because it's a tax we don't have to pay,'' he said. "For some people, it doesn't amount to much. But for other people, it amounts to a little more. Whatever little you can save counts.''
The only criticism of the $25,000 exemption is that lawmakers failed to tie the tax break to any inflation index, meaning the exemption's value will steadily decline.
The more controversial business tax break is the 10 percent cap on annual property assessments for non-homestead property, including commercial property and second-home owners.
"Simply put, the 10 percent cap for non-homestead property is so high as to be of little value to most properties,'' says the new TaxWatch report.
The nonpartisan group said property assessment increases average about 5 percent a year, underscoring how little the cap could mean to most businesses and other non-homestead property.
Critics also point out the 10 percent cap does not apply to school taxes, meaning non-homestead properties would only have the limited protection for 60 percent of their tax bills. In contrast, Florida homeowners have a 3 percent annual cap under Save Our Homes and the limit also applies to school taxes.
Bishop, the AIF chief, said while his group supports the overall Jan. 29 tax-relief package, the business lobby wanted to see an assessment cap closer to 4 or 5 percent.
Bishop also said he doesn't like the fact the 10 percent assessment cap would only last for 10 years.
"It sort of adds insult to injury,'' Bishop said. "When it goes away, it's going to be damn difficult to get back in.''
In contrast, Herrle, the NFIB lobbyist, called the 10 percent cap "a significant step,'' saying it represents the first time the state has acknowledged that non-homestead property owners also deserve an assessment limit.
He also said while on average the 10 percent may be too high, it will help some property owners in certain situations.
"People have received assessments far in excess of 10 percent,'' he said. "This is going to provide a lot of protection.''
And like Gov. Charlie Crist, who is campaigning hard for the passage of the Jan. 29 amendment, Herrle said he believes Floridians will support the measure, although it will require approval from more than 60 percent of the electorate to put it in the state constitution.
"I think there's support for it,'' Herrle said. "I'm not going to say there is raging enthusiasm for it. But it's the best game in town on Jan. 29. If people don't go out and vote for it, they're not going to see these savings and protections.''
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