The timing couldn’t be better for the Florida legislature to pass the Out-of-State Online Sales Tax Bill. For the past two years, legislators have given out-of-state virtual vendors a $700 million advantage annually over our local retailers in places like Corey Avenue, Beach Boulevard and Central Avenue. This year that advantage is estimated at an astounding $1 billion dollars – or, half of our current projected budget shortfall.
Diligently working to level this playing field is a bipartisan effort in the state Senate, led for the second year by Joe Gruters (R-Sarasota). With just a few weeks until session, the Out-of-State Online Sales Tax Bill (SB50) only has one stop left on its journey to the floor. (The House has yet to even hear HB15, the companion bill by Clemons and LaMarca).
These bills would require that out-of-state online retailers collect and remit sales tax, just like their Florida-based competitors must do each year. This is not only fair, but also much needed after a year of record Main Street store closures. This bill is part of a fight for fairness waged by Main Street retailers since the early 1990s.
In 2018, retail shops won a big victory in South Dakota v. Wayfair, when the Supreme Court decided a business only needs an economic connection with a state to collect and remit online sales tax. Since then, every state except Florida and Missouri has passed statutes to enact this decision. Perhaps this is the year for Florida…
Senator Gruters’ bill would require virtual vendors that engage in 200 transactions per year, or more than $100,000 in sales per year in Florida, to collect and remit sales tax. Currently, consumers are supposed to track and remit this tax for online purchases themselves. (I bet you didn’t even realize this!) SB50 is expected to generate $937.6 million this coming fiscal year and $1.08 billion next year in state revenue. Collectively, local governments would see revenue increase by $229.5 million next fiscal year and by $253.7 million the following year.
Gruters is proposing that this become a “revenue neutral bill.” According to him, this means that the revenue collected will not go to fill the approximately $2-billion hole in the state’s budget, but would directly go back into the pockets of Floridians.
While the Senate Committee quibbles over how the money should be used, I’d like to throw in my two cents: We must prioritize small businesses and families, so let’s further reduce the business rental tax, as Senators Gruters and Ed Hooper suggest. This is an archaic tax that exists solely in Florida, which charges businesses tax on the rent they pay. This tax makes it tough for Main Street businesses.
Since hardworking Floridians will be the ones paying the online sales tax, let’s set aside some of this revenue for a rebate to families who qualify for the federal Earned Income Tax Credit. This will help offset the additional burden of the online sales tax. After all, the reason politicians dragged their feet to begin with was because they feared the Online Sales Tax would be seen as a new tax.
While not technically a new tax, for the 97% of Floridians who do not know they are supposed to pay online sales tax, SB50 will feel like a new tax. And, collecting this online sales tax is still the right thing to do, especially if we also care for our hard working families who can least afford it. The majority of the revenue could and should go toward a tax rebate.
An analysis of the Working Families Tax Rebate Bill, introduced in by Senator J. Rodriguez and Reps. Fernandez and myself, show such a program would only cost half of the revenue generated by SB50. This would go a long way to help families already struggling. The other half should go to offset business rental taxes.
There is a plethora of data showing that when families and small businesses receive these types of tax breaks and rebates, they pump the money back into the local economy. And, after 2020, this is exactly what Florida needs most.
“Home Rule” is a monthly column focusing on local and regional politics by Jennifer Webb, former member of the Florida State House, District 69, a founding partner of Omni Public, and an applied anthropologist. She lives in Gulfport with her wife, Cynthia, and their adopted pup, Bailey.