Tax Swap Plan is Bad for Business and Economy

April 18, 2008

TALLAHASSEE - Barney Bishop, Chief Executive Officer and President of Associated Industries of Florida testified this morning before the Senate Finance and Tax Committee on the Required Local Effort tax decrease proposal offered by the Tax and Budget Reform Commission (TBRC). 

In his testimony, Bishop said, “This proposed ‘tax swap’ is a ‘pig in a poke’ because it seeks to imply that citizens will see an overall decrease in their taxes paid.  There is no free lunch in Florida.  If citizens don’t pay out of their left pocket, they will pay for it out of their right pocket in increased sales taxes. If you believe in a free lunch, you should move to California, because that is a state full of folks who believe in a free lunch.”

Business leaders say the idea that a state sales tax increase will not hurt consumers because consumption is discretionary, is not necessarily true.  Bishop added, “When your car breaks down and you need a new car, you will pay substantially more in sales tax, and you lose the tax benefit of a trade-in because of the loss of exemptions and exclusions.  When your refrigerator, stove or air conditioner breaks down and you buy a newer one, you will pay substantially more in an increased sales tax.  Not all spending is completely discretionary.”

AIF encouraged state leaders to recognize that the tax swap proposal is sending the wrong message to businesses looking to move to Florida.   Bishop continued, “For those businesses that are already here or are looking to expand, they will put their plans on hold until 2011, when they can ascertain whether the new taxes will adversely affect their business.  This will significantly hurt our state’s economy at just the wrong time, when we appear to be sinking into a national recession.”

While commissioners on the Tax and Budget Reform Commission initially voted in favor of the tax swap plan, they will have to vote again next week before it can be included on the November ballot.

To that point, Bishop said, “There has been an argument made by some members of the TBRC that they have a moral obligation to vote the second time as they did the first time when this tax proposal was approved.  I reread Robert’s Rules of Order last night, and I could find no moral equivalency provision that requires someone to vote identical to how they voted the first time.  It doesn’t work that way in the Legislature, it doesn’t work that way in the courts, and it doesn’t work that way in a democracy.  If you get new facts and you want to change your vote – that is the American way.”