Florida’s Sales Tax Relief
FLORIDA’S PROPOSED SALES TAX POLICY ON MANUFACTURING EQUIPMENT WOULD LEAD TO REVENUE DIVERSITY FOR THE SUNSHINE STATE
By Rick Mayer
When one thinks of Florida, the hospitality and tourism industries quickly come to mind. In the past, they have been the lifeblood of Florida. According to an article published in 2011 on VisitFlorida.com, in that year alone, tourism was responsible for welcoming 87.3 million visitors who spent $67.2 billion, generating 23 percent of the state’s sales tax revenue. But as we quickly discovered during Florida’s 2005 hurricane barrage, as well as at the outset of America’s fiscal crisis in 2008, tourism is definitely not bulletproof. The need for more revenue diversity became glaringly evident.
In an effort to attract more manufacturing businesses to Florida, Governor Rick Scott recently announced that he will push for the removal of sales tax on manufacturing equipment in his 2013-14 budget. He cited the fact that Florida is at a $141 million competitive disadvantage with other states because of this sales tax. Most states do not force manufacturers to pay taxes on the purchase of equipment or require them to adhere to regulations for tax exemptions. Presently, in the state of Florida, a manufacturer must show a growth in production output of at least 10 percent in order to qualify for sales tax exemptions on these purchases. Governor Scott’s initiative will totally eliminate this requirement. This change in policy is strongly supported by the Associated Industries of Florida, as the savings will allow companies to expand and create more jobs.
Florida has been actively pursuing high tech manufacturers the past few years – as can be seen by this chart, Florida Qualified Targeted Industries for Incentives, published by eflorida.com. This chart identifies these preferred industries, among them Cleantech, Life Sciences, and Aviation/Aerospace. Growing these industries here at home, as well as enticing other like-minded companies to relocate, will lead to an increase in employment, and subsequently more revenue for the state’s coffers.
In How Money Walks, Travis H. Brown cites Florida’s low-tax environment as a major enticement for taxpayers to leave the enormously high tax rates of their home states behind. Along with them they will bring their talents, their wealth, and hopefully their companies. This aligns with Governor Scott’s long-term vision of economic growth for the state. Passing this initiative would increase the allure of the state even further. Florida has numerous ports and a vast infrastructure, plus the skilled workforce to accommodate further growth in the manufacturing sector.
As How Money Walks notes, taxes affect buying decisions not only by individuals, but also by businesses. Governor Scott recognized the need to grow revenue for the state by encouraging industry diversification. With this proposed new policy, Florida will see that increased growth, offering stability in times of economic stress.