The House Economic Affairs Committee got an in-depth presentation from Gov. Rick Scott's staff Tuesday, outlining his budget initiatives for continuing economic growth.
Most notably, the budget would provide a sales tax exemption on manufacturing equipment and increase an exemption on corporate income tax.
"Both of them are thoughtful. They're both achievable, too," said state Rep. Jimmy Patronis, R-Panama City, who chairs the committee.
The governor's chief argument for eliminating sales tax on manufacturing equipment is other states aren't charging it. Scott said it will make Florida more competitive.
Right now, businesses can receive the sales tax exemption only if their output increases by at least 5 percent after the equipment purchase. The governor's proposal would remove the 5 percent requirement starting Jan. 1, 2014.
The price to the state would be a recurring annual cost of $115.3 million and $26 million for local governments. Meanwhile, manufacturers would receive a recurring annual savings of $141.3 million, according to the presentation.
Patronis said the manufacturing industry is "fired up" about the possibility of making tax-exempt equipment investments. He said it would encourage these businesses to grow and expand. Of the two initiatives, the sales tax exemption is an easier sell, Patronis said, noting the state always is concerned with companies moving elsewhere.
"I think it's a no-brainer," he said.
But, corporate income tax reduction could be popular, too. The latest budget proposal would exempt nearly 2,000 additional businesses from these taxes.
The proposal would increase the number of corporate-income-tax-exempt businesses from 17,855 to 19,851 (70 percent of the state's corporations), but it would come at a cost of $18.4 million a year, according to the presentation. That means the 1,996 additional businesses would receive an average tax break of $9,218.
In 2012, the corporate income tax exemption increased from $5,000 to $25,000. Starting this year, the exemption increased to $50,000, and the recently unveiled budget would increase the exemption to $75,000 starting Jan. 1, 2014, according to the presentation.
The governor's budget website sells the tax proposal as a way to increase hiring.
"Eliminating this tax will ensure more small businesses can hire more workers, providing Florida families with jobs," it says.
But, Patronis said, it's more about giving companies confidence that Florida is a business-friendly state. He said this makes business managers more comfortable, so they're willing to take risks and invest in their companies.
Patronis said "in concept" he likes the idea, but there's a lot of give and take within the budget, and so he's unsure at this point.
Patronis said he'll push the idea, but it's most important the budget balances.
"The governor's basically got a package that I think we all feel in our gut is what we'd like to accomplish, but the session hasn't even started yet," he said.
Distributed by MCT Information Services
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