Thursday, December 20, 2018

Tax Hike to Spike Cost of Commercial Leases

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The cost of doing business in Hillsborough County is going up in January for many businesses who have commercial leases.

Effective January 1, 2019, Hillsborough County taxpayers will see an over 21% increase in the sales tax they must pay. Not only will that increase the cost of dining out, the cost of clothing, shoes, vehicles, appliances, TV's and other items taxpayers buy and consume everyday, it impacts commercial leases.

Both the one percent transit/rail tax and the half-percent school tax were rushed onto the ballot at the last possible moment to get on the November ballot. There was little to no public scrutiny and no media scrutiny, especially regarding the 1 percent transit/rail tax. There were no public debates and local media failed refused to inform the voting public of the entire impact of these tax hikes.

At the first DeSantis Transition Advisory Committee on the Economy meeting, ironically held in Hillsborough County that will have the highest sales tax rate in the state of 8.5%, the subject of the sales tax on commercial leases was brought up. Members of the committee voiced concerns about the tax - that it was hurting business in Florida. Florida is the only state in the country that imposes such comprehensive sales tax on commercial leases.

Sales tax on commercial leases has been an issue in Tallahassee and one that Governor Scott has wanted to address for years. Only in the last couple of years did the state legislature take action to reduce the state sales tax rate on commercial leases from 6% to 5.7% effective January 1, 2019. That small reduction in the state sales tax on commercial leases does not begin to bring relief to businesses in Hillsborough County who will see their sales tax on commercial go up 1.5%.

While the state is attempting to reduce the sales tax burden on commercial leases, Hillsborough County heads the other way.

Florida also imposes the comprehensive sales tax on what is called "transient rentals" for rental periods six months or less. Rental charges for accommodations at trailer camps, recreational vehicle parks, and mobile home parks (except certain mobile home lots) are also taxable.

In addition to the sales tax, a maximum of 6% tourist tax is imposed on transient rental accommodations. In Hillsborough County, the current tourist tax is 5% but the county has met the threshold to raise it to 6% which is the max rate allowed by the state, and the county commissioners could raise it.

The state legislature passed HB585 in 2017 that expanded the use of the tourist tax to include capital costs of public facilities "needed to increase tourist-related business activities" as long as certain criteria is met. Public facilities are defined as including but "not limited to transportation, sanitary sewer, solid waste, drainage, potable water, and pedestrian facilities."

All for Transportation never accounted for the broadened use of the tourist tax. They did not account for value capture financing either which the Feds are starting to require to pursue federal transit grants.

All for Transportation's 30 year $16 Billion tax hike that passed overfunds pedestrian infrastructure and bike paths by hundreds of millions of dollars over what was included in the Hillsborough MPO's 20 year 2040 long range transportation plan. And the All for Transportation tax hike charter amendment specifically prohibits making any changes to that over funded pedestrian/bike path funding category for 30 years.

It is estimated that Hillsborough County tourists pay about 20% of all sales tax in Hillsborough County. Local taxpayers are stuck with paying the overwhelming majority of the sales tax revenues.

It is businesses who must pay the sales tax on their commercial leases. The 21% sales tax increase will immediately raise the cost of doing business in Hillsborough County on January 1, 2019. It will be the small business owner who will be hurt and negatively impacted the most.

Was there any local reporting on the impact of the massive tax hike on commercial leases or transient rentals - for 30 long years? We found none.

Did the Tampa Chamber bring this up? Was it mentioned by Tampa Bay Partnership, the special interests lobbyists who funded the tax hike initiative? Nope, because they don't care and they did not want the public to know.

All for Transportation was not informing the public of all the impacts of their massive tax hike in their $4 million marketing blitz. They were refusing to tell the public it was a tax hike they were promoting.

And All for Transportation lied that they had the only proposed transportation funding solution in Hillsborough County.

As we reported here, an alternative funding solution was presented to the county commissioners in April. That funding solution requires no massive 30 year tax hike and no increase to commercial leases that hurts low income and small businesses the most.

Action was even taken by the county commission on June 6th to have the "no tax hike needed" proposed transportation funding plan be considered by the BOCC Citizens Advisory Committee. But that information was not considered "newsworthy" by local media who suppressed the information and refused to report about it.

Commissioners Pat Kemp and Les Miller considered the no tax hike funding solution worthy enough to vote "yes" on June 6th. They then turned around and supported the special interests funded tax hike petition drive the next week.

Kemp and Miller were for pursuing a transportation funding solution that did not require a tax hike before they were against it.

Do Kemp, Miller and newly elected commissioner Kimberly Overman, who all supported the tax hike, think this big tax hike on commercial leases in Hillsborough County is good? Does it make Hillsborough County more competitive?

Shamefully, no other county commissioner except Commissioner White publicly raised any questions about All for Transportation's 30 year $16 Billion tax hike.

Businesses in almost all other counties in Florida will be getting some sales tax rate relief on their commercial leases effective January 1.

But instead of getting a sales tax rate reduction on commercial leases to 6.7%, the sales tax on commercial leases in Hillsborough County will go to 8.2% - the highest in the state.
Hillsborough County sales tax on
commercial leases
Peeling back the onion of the All for Transportation $16 Billion tax hike is just beginning.

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