House tweak awaits Senate nod as Florida online sales tax bill approved
(The Center Square) – With three weeks before the session adjourns, Florida lawmakers Thursday notched a notable touchstone three years in the making when the House endorsed a Senate-approved bill requiring digital retailers to remit online sales taxes.
The House’s 93-24 approval of Senate Bill 50 – adopted 30-10 by the Senate on March 29 – marks the first time both chambers have advanced an online sales tax bill since the effort, spearheaded by state GOP chair Sen. Joe Gruters, R-Sarasota, began in 2019.
SB 50, however, is not bound for Gov. Ron DeSantis’ desk but back to the Senate because the House tweaked the measure before approving it Thursday.
The House added an amendment stipulating that after online sales tax revenues replenish the state’s Unemployment Compensation Trust Fund, they will be directed into slicing the commercial rent tax, or business rental tax (BRT), from 5.5 to 2 percent. Florida is the nation’s only state to levy a BRT.
Gruters endorsed the BRT provision, telling reporters, “This basically makes the bill revenue-neutral forever.”
SB 50 and House companion, House Bill 15, filed by Rep. Chuck Clemons, R-Newberry, mandate online retailers that sell at least 200 items or $100,000 worth of items remit the state’s 6-percent sales tax to generate an estimated $1.3 billion in annual revenues for state and local governments.
Florida and Missouri are the only two of the 45 states that levy sales taxes that have not tweaked tax collection regulations in the wake of 2018’s South Dakota v. Wayfair Supreme Court ruling that confirmed online retailers must collect and remit state sales taxes.
As SB 50/HB 15 advanced in committees, Gruters introduced a “revenue-neutral” provision, similar to a Missouri proposal, directing money generated by online sales taxes into the state’s unemployment trust fund to avoid raising unemployment taxes state businesses pay.
Before the pandemic emerged last March, Florida businesses paid $7 per employee in annual unemployment taxes. The rate went to $49 this year and could jump to $87, proponents argue.
The plan is supported by the Florida Chamber of Commerce, the Florida Retail Federation and other business groups that have argued for years it is unfair brick-and-mortar businesses must remit sales taxes while out-of-state sellers do not.
Clemons said Thursday SB 50 “will level the playing field” for state retailers.
“As a small business owner, I thank you for the prospect of hopefully putting people back to work at a time when people need it the most,” said Rep. Nick DiCeglie, R-Indian Rocks Beach.
Of the 40 Democrats on the floor Thursday, 22 voted against SB 50, as did Republican Reps. Tommy Gregory, Lighthouse Point, and Anthony Rodriguez, R-Miami.
“The use of $1 billion on regressive taxes collected in the middle of a pandemic is not a good idea,” said House Minority Co-Leader Evan Jenne, D-Dania Beach, suggesting the money be directed into the unemployed fund to help the unemployed instead of reducing the unemployment tax.
Rep. Anthony Sabatini, R-Howey-in-the-Hills, who is running for Congress in 2022, said he would have voted against the bill had he not missed the floor vote.
Sabatini said while SB 50 may not meet “the Tallahassee bubble definition” of a tax increase, “The Lake County definition is government taking more money from somebody than they did before” is a tax increase.
Florida law actually does require sales taxes on digital purchases to be paid, but it relies on state residents – the buyers – to do so through an “honor” system instead of requiring out-of-state retailers to do so. Florida’s Treasury estimates the state didn’t collect $480 million in online sales taxes in 2019 by relying on the “honor system.”
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