Letter From Speaker Feeney to Florida CSE

Joyce Malone

Citizens for a Sound Economy

Dear Ms. Malone;

Thank you for your taking the time to stop by and express your concern over the proposed new tax structure. Every member of the Legislature is elected to represent the people; this would be impossible without the citizens of Florida coming forward and stating their needs.

I applaud Citizens for a Sound Economy for their fight for our Free Enterprise System, tort reform and, most recently, for their ability to see this “tax reform” for what it really is – a tax hike. You have successfully helped me lead past efforts for tort reform and to give parents a choice in education.

I commend Senate President McKay for his boldness and courage in developing a proposal on what he perceives as Florida’s tax dilemma. However, not every bold idea is a good idea. Although I believe his proposed tax changes are well intentioned, I believe that the overall effect on Floridian’s would more likely be harmful than helpful.

Governor Bush pointed out that Floridian’s deserve a committed effort from the Legislature to find better, smarter, more efficient ways to accomplish our priorities, rather than requiring our hard-working citizens to give an ever-increasing portion of their income. He also stated his concern regarding the impact the Senate proposal would have on Florida’s ability to continue to attract job-creating business investments. I agree with the Governor on both points.

Recently the House Select Committee on Florida’s Economic Future completed a series of public hearings statewide. I appointed this bi-partisan committee to determine how Florida taxpayers felt about the proposed changes. The public hearings drew thousands of participants and observers throughout the state. In addition to the public testimony heard by the committee, we have received over a thousand e-mails, phone calls and written correspondence. The message is very clear – Florida’s citizens do not want this new plan.

In my efforts to review every aspect of this plan, I listened to both the House and Senate economists. Dr. Hank Fishkind, economist to the Florida Senate, testified before the House Select Committee that some 300,000 to 400,000 Floridians would have to begin compliance measures and add the administrative duties of collecting taxes on services they provide to their workload. Plumbers, tile setters, barbers, coin laundry operators, lawn service companies and hundreds of other professions will be forced to become tax collectors. The estimated cost for all these new tax implementations is $400,000,000 a year. This cost is in addition to new taxes the plan implements.

In the proposal, tourists appear to save over $300,000,000 in taxes the first year, but Florida’s families and businesses will make up the difference, meaning a $300,000,000 tax increase to Floridian’s in year one. In future years this plan turns into the largest tax increase in Florida’s history, leading to bigger government and more spending. This will hurt job growth, economic development and Florida’s future.

Yet another enormous problem under this plan is tax pyramiding, or tax cascading. Even tax free goods like groceries will be taxed before sales to consumers. Grocers use transportation, accounting services, legal services, consultants, engineers and other services that would be taxed under President McKay’s proposal. As grocery chains are taxed on these services for the first time, they will be forced to raise food prices to protect profit margins.

Dr. Fishkind suggests families may save on taxes under the plan, but business will pay more. Business will, he admits, pass on tax increases to consumers whenever possible, resulting in no net savings to Florida families. In those instances where businesses cannot pass along increased costs to consumers, they may close or move to other “business friendly” states.

Even if theses tax policy plans were positive, tax and fiscal policy should not be micromanaged and imbedded in perpetuity in Florida’s constitution. The legislative process is the place to tailor tax policy to current needs and trends. Business leaders around the state, after reviewing this tax plan, oppose it without exception.

Finally, this plan hampers business growth, economic development, private investment and job growth. I am opposed to increased taxes and broader tax bases. Instead I advocate increased prosperity and a broader economic base. In times of economic downturn we must do what we can to ease the tax burden on the citizens of our great state.

I thank you for your interest in this important state issue. I would hope that you would continue to remain involved and to share your views. Please do not hesitate to contact me if I can be of any other service.

Warm regards,

Tom Feeney

Speaker

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