Florida Gov. Rick Scott seeks $100 million cut in commercial lease taxes

Herald/Times Tallahassee BureauJanuary 29, 2014 

ORLANDO -- Florida Gov. Rick Scott called Tuesday for a $100 million cut in the 6 percent statewide sales tax on commercial leases, in efforts to complete his election-year proposal for $500 million in tax and fee reductions.

Scott made the announcement at an Ace Hardware store in an Orlando strip mall. Scott said Florida businesses pay about $1.4 billion a year in sales taxes on their rent payments, and he said the tax cut -- which equates to 1/2 of 1 percentage point -- will make it more affordable for businesses to lease space.

The governor's office said the tax reduction would amount to savings of $104 million a year.

"Florida is the only state that imposes this tax, and we must keep working to make Florida the best place in

the world to start and grow a business," the governor said in a statement.

Scott was flanked by several small business owners and representatives from the Florida Realtors, the trade group that has been lobbying for several years to exempt commercial rent from the state's sales tax. The organization has given more than $225,000 over the last two years to "Let's Get to Work," a political committee organized to help Scott win re-election.

Reducing the state tax also could give commercial-property owners more room to charge higher rents, boosting commissions for real-estate agents and brokers.

"We have to continue to drive down our taxes and our costs to get jobs," Scott said.

When Scott went on a statewide tax cut listening tour last year, he frequently heard from small business owners about the un

popularity of the sales tax on business rents. (Residential household rent has been exempt from the sales tax in Florida since 1971.)

Rick McAllister, president and CEO of the Florida Retail Federation, said in a statement that small business owners would welcome the tax reduction.

Some tax-policy experts say eliminating the tax on commercial rent could have unintended consequences. Some large companies have been able to cut their income-tax bills in other states by transferring their stores into tax-exempt real-estate investment trusts and then renting them back.

The companies can deduct those rental expenses from their taxable income, reducing their overall tax bill.

That strategy doesn't work in Florida because businesses would be avoiding corporate-income tax only to pay sales tax on their rent.

Scott's tax cut package also includes a $400 million rollback in steep increases in car and truck registration fees enacted by the Legislature in 2009. That rollback would save a typical motorist $25 a year.

-- This report includes material from the Herald's wire services.

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