Communications Services Tax, a Rubik’s cube, stalls in Senate

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A move to modernize the state’s Communications Services Tax stalled in the Senate Thursday with the Senate sponsor saying she wants time to solve the “Rubik’s cube” of changes needed to address advances in technology that have outpaced the state’s ability to tax it, reports Michael Peltier of the News Service of Florida.

Facing estimates that proposed changes could cost local governments up to $47 million a year in lost revenue – estimates disputed by the parties involved – Sen. Ellyn Bogdanoff. R-Fort Lauderdale, urged members of the Senate Finance and Taxation subcommittee to slow down, offering an amendment to SB 1060 to hold off tax changes and set up a working group to address a comprehensive response.

“We’ve been chewing away at the CST tax but at this juncture I am not comfortable , ” Bogdanoff told members before offering an amendment.

Following little debate, the panel approved the amendment that drops provisions that would have reduced taxes for many telecommunications companies for bundled services while accommodating a shift to pre-paid plans and other services that have emerged since lawmakers last made major revisions to the tax a decade ago.

The bill has raised concern among local government groups and school districts, which rely on the tax for $500 million a year in revenue, including funds for education construction projects.

Meeting last week, state economists said they could not determine how much local government would lose from changes in the tax. They indicated, however, that the lost revenue would likely fall in a range from $16 million to $47 million. Even that wide range isn’t fully agreed on.

“We learned a lesson over the last couple years over property tax and Band Aids and doing one thing at a time,” said Davin Suggs, lobbyist for the Florida Association of Counties. “This revenue source is important to the counties.”

The House version (HB 809) contains a provision that allows companies freedom to bundle both taxable and non-taxable items into one package and calculate taxes only on prices of the taxable portions of the bundle. The bill was approved by the full chamber on a 115-0 vote Thursday.

Faced with the concerns, the amendment approved by the committee simply sets up an 11-member working group that would study the communications services tax and make recommendations before the 2013 legislative session. Six members of the panel would come from the industry while five would come from the Legislature or the executive branch.

“Our technology is far outpacing our tax structure,” Bogdanoff said. “It is getting worse and not better.”

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.