Gov. Rick Scott campaigned on cutting taxes even more in his second term, and he has started 2015 off with a doozy: Chopping a half a billion in taxes from cable and cell phone bills.
Scott in January announced he wanted to lop $470.9 million in state tax revenue off the books by cutting the state's communications services tax by 3.6 percent. The change is part of Scott's $77 billion budget proposal for the 2015-16 fiscal year, which includes a total of $673 million in tax cuts. He had promised to cut taxes $1 billion in his second term.
The tax, known as the CST, is a somewhat complex combination of a state levy on wireless phone and cable service to both residents and businesses, a tax on gross receipts for services, a direct-to-home satellite service tax and a portion imposed locally, which varies from county to county. Combined, the tax can top 16 percent of a consumer's bill.
Scott is proposing to cut the state portion of the tax by 3.6 percent, from its current 6.65 percent for cable and phone and 10.8 percent for satellite. The proposal doesn't affect the gross receipts portion, which pays into the state's Public Education Capital Outlay program. Nor does it change the amount of money counties would get from the tax. Counties would still be free to alter their own portion of the CST as they see fit. According to his office, that will save a family spending $100 a month on cable and cell phone services about $43 a year, or $3.58 a month.
The tax has been a bone of contention among policy wonks because it is among the highest in the nation -- second or third, depending how you look at it -- and accounts for so much state revenue.
Kurt Wenner, vice president of tax research with the anti-tax advocacy group Florida TaxWatch, says the group has long supported cutting the communications services tax.
"We think it is probably the best way to give widespread, broad tax relief," Wenner said, pointing out TaxWatch is especially displeased with how the tax often is twice the local sales tax rate.
But when you take such a major revenue source away, government programs are going to feel it, said Karen Woodall, executive director of the Florida Center for Fiscal and Economic Policy, which advocates for programs that support low- and middle-income Floridians. She said taking that much revenue from the state budget would have wide-ranging effects on programs that would feel the crunch.
"It would make more sense if the lost revenue was replaced by closing corporate loopholes or ending narrow sales tax exemptions," Woodall said, pointing out the outsized benefits nonresidential customers would see from the cut. "It is also important to ask how much is going to individuals versus business. It might be better to help individual consumers on this one and leave business out of mix."
The Legislature considered a bill in 2014 that would have cut the tax, but in a different way and not by as much. Provisions from that bill, SB 266, didn't make it into a wide-ranging tax cut package, but the idea still has fans in Tallahassee, Wenner said.
"The size of the cut may be a little bit high for the Legislature, but I see a lot of support for reducing it," he said. A proposal to reduce the state's tax on commercial rent may complement an eventual cut to the communications services tax, he added.
Scott formally proposed cutting the tax in his state budget. The Legislature will consider the proposal when it begins its 2015 session on March 3. Until it approves a budget, we'll rate this promise In The Works.