Senate OKs $1B online tax to replenish unemployment fund

TALLAHASSEE — The Florida Senate on Thursday approved a proposal that would require out-of-state online retailers to collect sales taxes, with the money slated to be used to help Florida business owners avoid increases in unemployment taxes.

In a 30-10 vote, the Senate backed the proposal (SB 50), which is linked to an agreement between Senate President Wilton Simpson and House Speaker Chris Sprowls.

The agreement would use an estimated $1 billion expected to be generated each year through the salestax collections to replenish the state’s Unemployment Compensation Trust Fund, which became depleted because of job losses during the COVID-19 pandemic.

“We’re going to make sure we replenish the unemployment trust fund up and to what the number was immediately prior to the pandemic hitting,” said bill sponsor Joe Gruters, R-Sarasota.

Without using the online tax, businesses face an automatic increase in their unemployment taxes.

More than $4 billion was in the fund before the pandemic. As unemployment claims continually draw upon the fund, more than that amount is expected to be needed to get the fund back to the prepandemic level.

To generate the money, the plan would begin requiring out-of-state retailers to collect and remit sales taxes when Floridians make purchases. Worried about a competitive disadvantage, Florida business groups have long lobbied for the state to require the collection of taxes by the remote sellers.

Currently, retailers that have a physical presence in Florida must collect and remit sales taxes for items sold in the state. Through what is sort of an honor system, Florida residents are supposed to submit sales taxes when they are not collected by out-of-state retailers. But few Floridians comply with that requirement.

Democrats opposing the bill said the additional revenue should provide assistance to people in the workforce or to help raise unemployment benefits, which at $275 a week are among the lowest in the nation.

“We’re helping the monoliths, the giant businesses, and we still have Floridians who are suffering and need help,” said Senate Minority Leader Gary Farmer, a Lighthouse Point Democrat who was among the 10 Democrats who voted against the bill.

After the vote, Simpson sent out a news release in which he said the bill will complement legislation (SB 1906) that would increase the weekly benefits to a maximum of $375.

“Rather than treating additional revenue that is already owed to the state as a windfall, the prudent thing to do is to reinvest these funds in our Unemployment Compensation Trust Fund, helping businesses survive a situation no one could have anticipated, and shoring up benefits for the struggling Floridians who have lost their jobs as a result of this pandemic,” Simpson said in the release.

A House version of the bill (HB 15) has been approved by the Ways & Means Committee and awaits an appearance before the Commerce Committee.

Under Gruters’ proposal, the tax collections would be focused on out-of-state businesses that conducted more than $100,000 of sales the prior year.