According to a new report from the Florida Center for Fiscal and Economic Policy (FCFEP), an economic development package that passed during the Legislative session this year included “$125 million in special-interest tax breaks.”
House Bill 7087 set aside subsidies and tax breaks for companies aimed at helping businesses create jobs in the state. As of this year, Gov. Rick Scott now has the power to dole out a lot of the subsidies himself.
There is currently no mechanism in place to ensure that these tax breaks and handouts actually create jobs – a common criticism from progressives in the state. Many have denounced the state for making deep cuts to important government services while continuing to set aside funds for tax breaks and subsidies.
FCFEP says in a report this month that the most costly tax break in HB 7087 is a reduction in “sales tax payments to the state and to local governments by $56.4 million annually, [which] results from broadening eligibility for an exemption for industrial machinery and equipment by businesses that are expanding.”
According to the group other tax cuts in the bill include:
- $29.4 million annually from increasing the corporate income tax exemption from $25,000 of profits to $50,000
- $12.3 million annually from expanding the sales tax exemption for repair and maintenance of aircraft. The current exemption is granted for aircraft weighing 15,000 pounds or more; the revised exemption lowers the aircraft weight requirement to 2,000 pounds. Sales tax exemptions on electricity used in packinghouses and on materials used in the manufacture of aircraft engines and gas turbine engines will cost the state and local governments $2.7 million each year
- State general revenue will be cut by $3.8 million each year through the creation of enterprise zones in Charlotte and Citrus counties and modifying the number of employees businesses need to qualify for the Urban High-Crime Area Job Tax Credit
Last year, the FCFEP released a report calling upon legislators to evaluate whether or not the many tax breaks and grants afforded to companies by the state of Florida are actually creating jobs. The group argued that the state “provides huge benefits to selected companies each year, many of which receive little or no examination of their value to Florida’s economy.” At least $4 billion in annual breaks have been given to businesses in the state of Florida in the past couple of years, according to the report.
Most recently, however, progressives in Florida won a battle over this very issue. Earlier this month, Florida Senate President Mike Haridopolos committed to including “a formal study reviewing the effectiveness of economic development incentives, tax credits, exemptions, and subsidies,” in HB 7087, which is now on its way to the governor’s desk.
In its report, FCEP concludes that “tax cuts and other giveaways reduce revenue available to meet critical state needs in public schools, colleges and universities, healthcare, and social services.”
“Each dollar given away takes money away from those state responsibilities,” the group continued. “They also add to the billions of dollars already lost through the hundreds of exemptions, exclusions, deductions, and credits in Florida’s tax laws.”