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Florida Tax Commissioner Calls for New Taxes on Business Services

The sales tax exemptions under Florida law for advertising and other business services may once again be under attack.

Former State Senate President John McKay, now a member of the Florida Taxation and Budget Reform Commission, has proposed a constitutional amendment to require the Florida Legislature to reduce property taxes by extending the sales tax to most business services.

The Taxation and Budget Reform Commission was established by constitutional amendment in 1988. It consists of 29 members, 11 appointed by the Governor, seven appointed by the President of the Senate, seven appointed by the Speaker of the House and four non-voting ex officio members who are members of the Legislature. Former Senate President McKay was appointed to the Commission in February by Florida Governor Charlie Crist.

The Commission can make recommendations to the Legislature on tax and budget issues, but it can also take proposals directly to the voters in the form of proposed constitutional amendments. A two-thirds vote of the Commission members is required to propose a constitutional amendment. To reach the ballot in next November's election, the McKay proposal would have to be approved by the Commission by May 4, 2008.

The former Senate President has fought this battle before. In January of 2002, he proposed a bill to eliminate the sales tax exemptions for almost all products and services, including advertising time and space. On the last day of the session, the Legislature approved a proposed constitutional amendment to create a special legislative panel to review all sales tax exemptions, including the exemption for advertising services. That proposal was struck down by the courts and never made it to the ballot.

Senator McKay was term-limited out of office in 2002 but continued his battle as a private citizen. In 2005, he joined with former Comptroller Bob Milligan and former Attorney General Bob Butterworth to propose a similar constitutional amendment to repeal most business service exemptions. That proposal was also struck down by the courts and never made it to the ballot.

ANA is working with member companies and other industry groups to closely monitor developments on the McKay proposal and we will get back to you with further updates. Florida was once ground zero for advertising taxes. In 1987, the Florida Legislature passed a broad tax on all professional services, including advertising, but repealed it one year later after considerable industry lobbying.

 

If you have any questions or more information about the proposal, please contact Keith Scarborough, Senior Vice President for Government Relations in ANA's Washington, DC office at kscarborough@ana.net or (202) 296-1883.

 

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