Florida legislators have drafted a bill, House bill 2540, to allow for the review and consideration of all existing tax breaks by a standing commission who would evaluate their effectiveness. The commission will be expected to submit recommendations before the end of each of the three years of the review period. It is expected to review current tax policy that permits out of state merchants to sell to Florida consumers online taxes free.
Another provision of the new tax law requires that the legislation authorizing any new tax break state the public policy goal it is meant to accomplish as well as a breakdown of costs and benefits and an analysis of whether the law should include sunset provisions or a mechanism for a claw-back.
The review of tax expenditures is expected to encourage commission members to think about the possibility of getting rid of some exemptions altogether. Broader based taxes with lower rates would be simpler to administer than the present variety of taxes and associated exemptions, and would reassure the public of the fairness of the system.
The committee would include representatives from the state treasurer’s office and the state auditor’s office as well as two representatives who also sit on the Council of Economic Advisers. While the law closely resembles previously submitted legislation, the provision for an annual review is new.
Such 2011 tax reform is part of a larger effort that includes efforts to get giant online retailers like Amazon and Fat Wallet to pay the tax due on Florida sales of merchandise purchased online. Voluntary sales tax payments have not been adequate for the amount of online retail that occurs. Similar laws have been passed in New York and California while other states are considering such legislation. The revenue expected to be generated has not been equal to the actual revenue generated for most states that have enacted a similar law.