TaxWatch’s COVID-19 recovery plan: Tax relief, incentives and grants

Even when businesses do reopen many aren't operating for as many hours, limiting what workers can earn. Photo: John Partipilo.

A fiscal watchdog organization for state government has proposed a pathway for Florida out of the COVID-19 economic mire that would include adjustments for taxes paid by businesses and individuals, including landlords unable to collect rent from out-of-work tenants.

Florida TaxWatch said it would send the recommendations to Gov. Ron DeSantis, members of the Florida Cabinet, the Legislature, and the Florida Department of Revenue.

The report, released Thursday, strongly advises against tax increases.

“Many will wish to raise property taxes or other taxes and fees to recoup [lost] revenue,” it says.

However: “Elected officials must always remember that the pandemic is hurting all citizens and businesses and many of their incomes are falling as well. Raising taxes will add to the burden taxpayers are already experiencing and will slow the economic recovery.”

Rather, the report recommends rolling back property tax rates and requiring a unanimous vote of local governing boards and commissions to raise them. The same principle would extend to special assessments and impact fees.

Additionally, taxpayers need extra time to pay what they owe on residential and nonresidential property to account for COVID-related income loss, the report says. It suggests legislative or administrative action to this end.

TaxWatch convened a task force that produced 29 recommendations. Paricipants included public policy experts and some of Florida’s largest corporations and lobbies — for example, Wal-Mart Stores Inc., Publix Supermarkets Inc., Capital City Bank Group Inc., the Florida Restaurant & Lodging Association,  the Florida Bankers Association, and the Florida Retail Federation.

The document surveys the catastrophic damage COVID has wrought on Florida’s economy: Tourism has dropped by 68 percent; GDP (Gross Domestic Product) fell by nearly 33 percent during the second quarter and the prospects for the third quarter look even worse; unemployment in May was 13.7 percent, meaning 1.3 million Floridians were jobless. General revenues fell $1.9 billion short of estimates during the recent fiscal year and will fall $3.4 billion short during this fiscal year.

The state has received nearly $5.6 billion in federal CARES Act relief, but owes $950 million of that to local governments, the report says.

The document recommends disaster relief for commercial and residential landlords “equivalent to the annualized value of economic damage suffered” through lost rents. It recommends applying this relief toward the 2020 budget year if possible.

“The task force notes that some property appraisers have also raised the general idea of a credit and some members have approached legislators in that regard,” the report says.

The report also recommends a series of tax credits, incentives, and grants. For example, the state could credit half the value of contributions to community development projects against corporate income, insurance premium, or sales taxes.

Moreover, the state could expand its rural and urban jobs tax credits to include restaurants, bars, and retail as an encouragement to keep workers on the payroll. These credits would be available in the state’s designated rural and urban development zones.

A separate grant program would help businesses finance personal protective equipment, sanitization expenses, and other costs of making their workplaces safe.

The report recommends relief on sales taxes paid on business rents for enterprises unable to operate, or operating at reduced capacity, because of COVID; and a temporary exemption for COVID-related purchases and cleaning equipment.

And it recommends a series of technical adjustments to Florida’s tax regime, including eventual elimination of the business rent tax and extension of Florida’s sale taxes to e-commerce. The report sees a place for tax incentives for film, TV, and digital media productions.

“The U.S. motion picture and television industry is a major private sector employer, supporting 2.1 million jobs and $139 billion in total wages in 2016. These are high-quality, high-paying jobs, with an average salary ($90,000) that is 68 percent higher than the average salary nationwide,” the report notes.

The Phoenix wrote earlier about a bill in the 2020 legislative session — a rebate program to attract filmmakers and production companies to do business in the Sunshine State. That particular legislation died at the end of the session, as did a similar House bill.

Michael Moline
Michael Moline has covered politics and the legal system for more than 30 years. He is a former managing editor of the San Francisco Daily Journal and former assistant managing editor of The National Law Journal. He began his career covering the Florida Capitol for United Press International. More recently, he wrote for Florida Politics.