George Gibbs Center for Economic Prosperity


By: The James Madison Institute / 2017

The tax burden on Florida residents will decrease by about $180 million—through new tax cuts, exemptions, and carve-outs—in the next fiscal year.

The bill, which Gov. Rick Scott (R) signed into law on May 25, reduces business taxes on commercial leases and cuts property taxes on government housing projects and assisted-living facilities.

Starting in January 2018, feminine hygiene products will be exempted from the state’s sales tax, and the state will hold sales-tax holidays, a kind of temporary sales tax exemption.

‘Very Small’ Cuts

Sal Nuzzo, vice president of policy at the James Madison Institute, says the tax relief for business owners is “very small.”

“There was a very small reduction in what’s called the ‘business rent tax,’” Nuzzo said. “Florida is the only state that charges sales tax on leased property. If you’re a small business owner and you pay rent on your office or facility, you also pay a sales tax on top of that.”

Setting a ‘Glide Path’

Nuzzo says Florida’s business rent tax drives the state government’s budget while driving business owners away.

“It’s one of those where it’s a huge revenue generator for the state,” Nuzzo said. “They did a very small reduction in that business rent tax, in the hopes that [they] can come back and try to figure out a glide path for it over a period of several years. I think the glide path for the business rent tax would be a huge boost, not only for tax reform but also for economic development in the state.

“If a business is looking to start, and we border Georgia and Alabama, and they are trying to consider where to locate, they’ve got those options, and Florida is the only one they have to add 6.5 percent on to their lease price,” Nuzzo said. “That can make a bottom-line decision. That’s something where I think one of the bigger things we can work on in the next session or two is getting that taken care of completely.”

Bad Working Relationship

Kurt Wenner,vice president for researchat Florida Tax Watch, says poor relations between the Florida House and Senate prevented the implementation of more significant tax reforms.

“The governor and the House have been pushing for some significant tax cuts, and the legislature in Florida has been cutting taxes now for several years,” Wenner said. “The Senate has been a little bit less willing to cut taxes to a great degree. It wasn’t a very congenial session, and there were a lot of arguments over various things.”