Steve Nicklas
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Mole crickets are bad for lawns. In contrast, new initiatives by the Taxation and Budget Reform Commission would be good -- for the Florida economy. The initiatives would increase and expand cuts in property taxes.
The commission’s most recent recommendations are for an average 25-percent reduction in property taxes per homeowner, as well as a cap on taxes for businesses and second/vacation homes. The commission’s proposals will be voted on by state residents in November.
The commission’s recommendations follow several earlier anti-tax initiatives. State residents overwhelmingly approved a reduction in property taxes in a January vote. Last fall, the state legislature initiated the reform by mandating that city and county governments trim their property tax rates.
The commission reconvenes every 20 years to review state finances. This year it has taken up the task of reducing taxes. Property taxes are viewed as a culprit in the state’s economic malaise. Along with skyrocketing homeowners’ insurance costs, high property taxes have accelerated a weakening real estate market here.
Much of the state’s revenues are dependent on a healthy real estate market. Gov. Charlie Crist has embarked on a campaign to reduce property taxes and insurance costs to help the economy recover. Crist is using a page from the supply-side economics handbook, which says lower taxes will invigorate the real estate market -- and generate even more in tax revenues.
A complaint about the earlier tax revisions is that they left out vacation/second-home owners and businesses. Under the commission‘s recommendations, the assessed value of a business or second home would be capped at a five-percent increase per year.
Local business owners have been complaining about 40 and 50 percent increases in their taxes due to unchecked assessments in past years. However, Florida homeowners have benefited from a three-percent cap on assessed values that is already in place for them.
The commission’s recommendations are based on eliminating property taxes paid to public schools -- about $9 billion statewide -- and replacing those revenues with a one-cent increase in the state sales tax. This would alleviate the loss in property tax revenues for schools.
This is a fair way to levy taxes, since it is based upon use. The more you spend, the more you pay. Also, tourists would help pay the freight in tax revenues in this way. Tourists certainly burden our public services.
Some officials around the state have tried to scare residents into opposing the recent tax cuts, inferring they would lose vital services such as police, fire and rescue. This is not the case at all. Vital services are the last to be cut.
Florida’s growth has been spectacular in recent years. It has helped generate millions of dollars in new tax revenues -- that many local level governments have turned around and squandered. It is time for change.
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Steve Nicklas is a financial adviser who lives on Amelia Island. He can be reached at (904)753-0236 or at thenicklasteam2@msn.com.