Florida has one of the highest tax rates on communications services in the nation-it can exceed 16% – and that rate is much higher than the sales tax rate on other retail purchases in Florida. This raises questions about the fairness of the tax rate, its economic neutrality, its effect on the competitiveness of Florida businesses and the attractiveness of Florida’s economic climate. This is according to a new briefing focused on the Communications Services Tax (CST) from Florida TaxWatch.
“In the relatively short time since the CST was created, technology has outdated the tax. The CST has many problems, including its very high tax rates,” said Dominic Calabro, President & CEO of Florida TaxWatch. “There is no discernible public policy justification for what amounts to discriminatory taxes on Floridians’ communications services, which ends up in most cases being more than double the maximum state and local sales tax rate in Florida.”
This briefing looks at the history of the CST in Florida, compares Florida’s rates to other states, finding that Florida is the fourth-highest state in the U.S. for this tax, and recommends that the Legislature look to reduce CST rates to “benefit a wide range of Floridians, affecting virtually all individuals and businesses.”
The report also points out that there is growing legislative sentiment to finally enact a law to collect more of the sales taxes due on remote sales, as long as reductions in other taxes are used to make it revenue-neutral. “Lawmakers would be hard pressed to find a more justifiable way to provide broad-based state tax relief than a reduction in the Communications Services Tax,” said Kurt Wenner, Vice President of Tax Research for Florida TaxWatch. “Remote sales tax legislation provides a way for them to do this.”