Florida House panel votes on $1.2 billion hike for online sales
Legislation would divert revenue to help businesses hit with tax increase
TALLAHASSEE — Florida consumers would pay more for some online purchases and the money would be used for a tax cut for businesses hit with a tax hike to replenish the state’s unemployment compensation trust fund under a bill passed by a state House panel on Thursday.
The legislation is part of a deal between GOP leaders that would divert $1.2 billion in new revenue gained from a change in how online sales taxes are collected into the unemployment compensation trust fund. The fund has fallen from about $4 billion before the COVID-19 pandemic spurred massive layoffs and overloaded Florida’s jobless benefits system to about $500 million today.
House Speaker Chris Sprowls, R-Palm Harbor, and Senate President Wilton Simpson, R-Trilby, unveiled the plan Wednesday evening and touted it as a way to help
businesses by giving them a tax break that would allow them to hire back workers laid off during the pandemic more quickly.
“This fiscally responsible legislation will cut taxes for our business owners, ensure that Florida’s small businesses and retailers with a physical presence in our state are competitive, and keep us the most business-friendly state in the nation,” Sprowls said in a statement.
The House Ways and Means Committee amended HB 15, which originally only dealt with the online sales tax, to divert the money to the unemployment trust fund, and then passed it by a 16-2 vote.
Two lawmakers from opposite ends of the political spectrum, Rep. Anna Eskamani, D-Orlando, and Rep. Anthony Sabatini, R-Howeyin-the-Hills, voted against it.
Eskamani, along with some Democrats and union advocates, said it is unfair to tax consumers and hand that money to businesses, especially without addressing Florida’s unemployment system, which pays some of the lowest benefits and broke down at the beginning of the pandemic.
“If we’re going to make this grand bargain … why not make sure workers get a piece of it?” Eskamani said. “The pie is getting bigger, so why don’t we share it with workers?”
Eskamani filed an amendment to increase Florida’s $275 maximum weekly unemployment benefit to $375, but it was withdrawn because it would’ve broken House rules restricting a bill to a single issue. Another amendment she submitted to put the new online sales tax revenue into the affordable housing trust fund was defeated by a voice vote.
Under current law, online retailers don’t have to collect and send to the state taxes on goods and services if they don’t have a physical location in Florida.
For a large online retailer such as Amazon, that means it only sends sales taxes to the state on goods purchased directly from them, not from goods purchased from thirdparty, out-of-state sellers who use their platform to connect with buyers.
Consumers are supposed to pay the tax on their own, but they rarely do, and there has been no penalty attached for those who don’t. The bill would require out-of-state sellers to collect the tax.
Sabatini objected to the bill because it is an effective tax increase, even though supporters note that it doesn’t change the rate of the tax.
Sabatini called that the “Tallahassee lobbyist definition of a tax increase.”
“The Lake County definition of a tax increase is the government taking more money from somebody than they did before,” Sabatini said.
Sabatini also noted that the bill creates a permanent tax increase on consumers while only giving businesses a temporary tax cut.
Supporters of the measure, however, said businesses should remain the focus of the bill, even if the affordable housing trust fund could use a boost.
“I understand this money could go just about anywhere ... but this bill is about businesses,” said Rep. Michael Caruso, R-Delray Beach. “The issue of the [affordable housing] trust fund and helping the underserved is a whole different issue for another day.”
Some businesses have seen automatic unemployment tax increases to build the fund back up.
The minimum rate of $7 for the first $7,000 in wages for each employee rose to $20.30 per employee. The maximum rate stayed flat at $378 per employee. Each company’s rate is based on their history with the unemployment system; if a business laid off many workers in a given year, they’ll pay a higher rate the following year.
The tax increase was triggered when the trust fund dropped, however, and new revenues are needed to build it back, putting tax increases on businesses that didn’t lay off any workers last year.
As the fund gets replenished, the taxes would go back down. The minimum tax rate is slated to increase to $87 per employee in 2022, then start falling back down, to $80 in 2023, $36 in 2024 and back to $7 in 2025. Under the bill, the minimum rate would go back to $7 per employee immediately, retroactive to the start of the year.
“Because we’re creating such a strong and large new tax it’s similar to literally turning on a fire hydrant to fill up a water glass,” Sabatini said.
Rep. Chuck Clemons, R-Newberry, who sponsors the bill, said it would be up to future legislatures to decide how to spend the new revenues.