AIF WARNS AGAINST
TIMING AND MANNER
OF McKAY TAX REFORM
December 17, 2001
After reviewing the tax-reform
proposal released by Senate President John McKay (R-Bradenton),
Associated Industries of Florida (AIF) has decided that it is
unable to support the plan.
"We applaud Sen. McKay for having the courage to tackle
this issue," said Jon L. Shebel, AIF’s president & CEO,
"but we disagree with the means he has chosen to reach his
objective. We have pursued tax exemptions in the past that brought
economic benefits to the state. We also have never refused to
support efforts to change the tax system, but it’s a
responsibility that needs to be undertaken calmly and
reasonably."
Forcing the Legislature to approach the task through a
constitutional amendment will not create an appropriate setting
for stimulating rational debate about the economic principles
underlying certain sales tax exemptions. Sen. McKay points out
that Florida is facing a $4 billion dollar deficit in tax revenues
within the next six years. That means that reform of the sales tax
system will only be revenue neutral for a short time.
The McKay plan would result in $9.5 billion in lost revenue
after repealing certain taxes and rolling back the sales-tax rate
from six percent to four percent. Economists predict that the
average tax burden on each Florida family would drop by $133 to
$150, while tourists would also pay less in sales tax during their
visits to the state. That means the bulk of the new taxes would be
imposed on Florida businesses.
"We agree with Sen. McKay that there should be a broader
base for collection of government revenues," said Randy
Miller, AIF’s senior executive vice president, "but at AIF
we believe that this can best be achieved by broadening the
economic base, not by making more business transactions
taxable."
Miller also believes that Florida’s sales tax is not as
outdated as everyone assumes.
"It has served us well and it has been updated over the
years," Miller said. "Revenue for everyone — business,
households, and government — drops during a recession. This time
the problem was with the tourism industry. Ten years ago it was
construction. Dropping revenues during a downturn is a problem
that can’t be solved."
Shebel and Miller agree that there are probably exemptions on
the books that no longer make sense. "We need to take a look
at these," said Shebel. "AIF agrees with that. But we
don’t need to create a false sense of panic by using the
constitution to force lawmakers to take on the job."
Associated Industries of Florida is a statewide employers
association representing 10,000 businesses that range from large
multinational corporations to small family-owned enterprises. AIF
is commonly known as "The Voice of Florida Business."
516 North Adams Street ● Post Office Box 784 ● Tallahassee, Florida 32302-0784 ● Phone: (850) 224-7173 ● Fax: (850) 224-6532 ● www.aif.com
