Governor Kasich is seeking to expand the state sales tax base to help pay for a $4 billion income tax cut. This is not the first time a state has attempted to broaden its sales tax base. Yesterday we looked at Gov. Taft’s 2003 effort. Today we review the 1987 expansion of Florida’s sales tax to services which faced many of the same roadblocks.
At the end of the 1986 legislative session, the Florida legislature passed a bill extending the state’s five percent state sales tax to an array of new services and repealed exemptions for many previously exempt services. Florida did not have an income tax and needed additional revenue to provide services for a rapidly growing population.
After the bill’s passage, the legislature was forced to postpone the tax’s enactment until July 1, 1987, citing “significant policy, revenue, legal and administrative implications” that required further consideration. Six months later, the new sales tax was repealed.
Here’s what happened:
Yesterday, representatives from industries including realtors, travel agents, insurers, criminal defense attorneys, laundromats, bowling alleys, grocers and veterinarians spoke in opposition to the plan that, they argued, would drive companies out of state, cut into their profit margins or result in higher costs for consumers. Testimony on the plan continues today, with amendments to the plan expected after the upcoming two-week spring recess.