From left to right: Rick Kearney, Patrick Arrington, Keyna Cory, Rick McAllister, Rep. John Stargel, CFO Gallagher, Sen. Mike Haridopolos, John Sebree, and Steve Birtman.
I am joining state lawmakers and business groups in calling for the repeal of an onerous tax that would financially burden small and large businesses, their employees and customers, as well as hinder the state’s ability to recruit and retain new business to Florida.
Under current Florida law, the tax applies to “the transmission, conveyance, or routing” of voice, data, audio, video and cable services, through electronic, radio, satellite, cable, optical, microwave or other media. Experts say if the tax language is fully applied it could cost Florida businesses hundreds of millions, as much as 13 to 14 percent of the annual operating cost of all communications equipment covered by this provision of law.
Legislation to repeal the tax is being sponsored by Representative John Stargel from Lakeland (House Bill 49) and Senator Mike Haridopolos from Melbourne (Senate Bill 818). It makes sense to repeal the tax in the wake of new estimates that Florida will see an extra $2.2 billion in taxes next year. The measure to repeal the tax has passed the House and is currently pending in the Senate.
Joining us at the press conference to highlight the potential costs to small and large businesses in Florida were Rick Kearney, Chair of ITFlorida, Inc., Rick McAllister from the Florida Retail Federation, John Sebree from the Florida Realtors Association, and Steve Birtman from the National Federation of Independent Business.
The substitute communications tax was instituted in 1985 as a part of the state’s gross receipts tax on telephone service. The provision originally applied to internal telephone, intercom, and telecommunications systems that companies operated as a substitute for systems operated by a telephone company. Only a small number of companies currently pay tax under this provision, amounting to about $400,000 per year.
However, in 2000, state lawmakers revamped Florida’s telecommunications laws and changed the communications tax language to more broadly capture other types of communications equipment. The new law became effective in October 2001 but the tax imposed on substitute communications systems has not been enforced by the Florida Department of Revenue (DOR) because of continuing uncertainty about how the law applies to a rapidly changing communications and business environment.
If enforced, a company operating a taxable substitute communication system would owe tax, penalty and interest back to 2001. Companies would owe tax based on their cost of operating substitute systems, including depreciation on equipment and salaries of staff who maintain and repair them. The tax would not apply to the initial purchase of the equipment.
In roundtable meetings that I held recently with small business leaders across the state, alarm was expressed about the Substitute Communications Systems tax. No other state in the country has this tax. It is a ticking time bomb for Florida’s businesses and we need to get it off the books. Just the threat of it puts Florida at a disadvantage in a highly competitive national and worldwide business environment.
Gadsden, Florida's fifth county, was formed in 1823. It once ran from Georgia to the Gulf of Mexico, from the Suwannee River to the Apalachicola River. Quincy, the county seat, was incorporated in 1828. The courthouse, above, was built in 1912.
