Volume 2 Number 16
April 18, 2005




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.






Florida’s Chief Financial Officer Tom Gallagher proudly announced the names of six students who were the top picks in an essay contest aimed at encouraging financial literacy among middle and high school students.  Gallagher presented checks to three of the students at their schools in both Orlando and Tampa.

The contest, “Cash in on Your Money Smarts,” asked students, ages 14 to 18, to submit at least a 750-word essay on why they considered themselves money smart and offered students a chance at more than $7,500 in prizes statewide.  First, second and third place prizes will be awarded to teens in given geographic regions, for a total of 15 winners statewide.  Nearly 600 students participated this year.

“This essay contest was a great way to encourage Florida’s young people to show off their financial knowledge and writing skills, and reward them for it,” Gallagher said.  “Learning these valuable skills now will pave the way for a lifetime of financial success.”




From left to right: Hector Beauchamp, Felix Marquez, Lee Pease, Tracey Gilbert, Germaine Green, Terence Phillips, Sharette Streden, Carolyn Martin and Bob Lotane.








From left to right, back row: Hector Beauchamp, Gerald Justice, Donald Lott, John Kuhla, Sheryle Birdsong, Germaine Green and Rafael Blumberg. Front row: Ray Reynolds, Terence Phillips and Sharette Streden.



Florida’s Chief Financial Officer Tom Gallagher announced the completion of a sweep of construction sites across areas of Florida to verify that employers are complying with state workers’ compensation insurance laws.  As part of the statewide effort, teams of investigators with the Department of Financial Service’s Division of Workers’ Compensation made random site visits last week in Volusia, Brevard, Palm Beach, St. Johns, Flagler and Duval counties, ordering dozens of employers to stop working because employees were not properly covered by workers’ compensation insurance.

“Employers who avoid paying workers’ compensation premiums contribute to the rise in workers’ compensation rates and gain an unfair advantage over competitors,” said Gallagher.  “A healthy workers’ compensation system is crucial to Florida’s economic health, and we will continue to aggressively investigate instances of fraud and abuse.” Under state law, businesses engaged in the construction industry with one or more employees must provide workers’ compensation coverage, which protects workers who are injured or killed on the job. CONTINUED






Florida’s Chief Financial Officer and State Fire Marshal Tom Gallagher applauded the passage of legislation, sponsored by Sen. Daniel Webster and Rep. John Stargel, that would require all of the state’s nursing homes to have automated fire sprinkler systems by 2009. 
A loan guarantee program would be made available to help the estimated 35 nursing homes, mostly older facilities, that currently are not protected by any kind of sprinkler system. 
 “A fire sprinkler system could be the difference between life and death for nursing home residents who are disabled or have limited mobility,” Gallagher said.  “An uncontrolled fire can quickly overwhelm a senior citizen, even one who has practiced evacuating safely.”  CONTINUED





Urges Consumers to Verify Organization and Agent Authorization

Florida’s Chief Financial Officer Tom Gallagher urged Floridians interested in signing up for a medical discount card plan to verify it is licensed to do business in the state.  Legislation passed last year requires companies selling plans in Florida be licensed as of March 31, as well as the agents selling the plans must be disclosed.  
“This is an industry where the potential for rampant fraud was great.  Too many Floridians were being ripped off by unscrupulous operators, and many were made to think they were buying health insurance when in fact they were signing up for discounts on medical services or prescriptions,” said Gallagher, who oversees the Department of Financial Services. “Consumers who are presently paying for a discount medical plan or are considering signing up for one need to Verify Before You Buy.”   CONTINUED


A Louisiana contractor is facing felony charges for failing to obtain workers’ compensation insurance for workers he brought into the state to rebuild hurricane-damaged roofs in Central Florida.

Todd Woods, 37, owner of A-1 Construction and Roofing, was arrested by investigators with the Department of Financial Services, Division of Insurance Fraud.   He is charged with failure to obtain Florida workers’ compensation insurance, a second-degree felony punishable by up to 15 years in prison, and presenting false information as evidence of compliance, a third-degree felony punishable by up to five years in prison.  Woods was booked into the Osceola County Jail and released on $1,500 bail.  The Osceola County State Attorney’s Office is prosecuting the charges.

 “When workers show up to perform a job, they deserve to be protected in case they get injured,” said Florida’s Chief Financial Officer Tom Gallagher, who oversees the department.  “Employers who don’t protect their workers will be held accountable.”