Yesterday, the Sun Beam Times reported that, if passed by voters, Pinellas County will have the highest sales Tax in the state at 8%. Some readers pointed out that the tax does not apply to items after $5,000. Thus no more than $100 would go to the county of the total $400 collected from a $5,000 purchase. Thus a correction is in order: Consumers purchasing cars, boats and other high priced items will not pay more than $100 extra for the County based “discretionary” sales tax. However, this means that those buying higher priced items will be exempt from paying taxes than those buying lower priced items will have to pay at the full rate. That is the very definition of a “regressive tax” – it effects those at lower income levels more profoundly than those at higher income levels. Taxation is most fair and appropriate when applied equally to all – at the lowest rate possible.
In addition, a review of Florida statutes reveals that there are many things taxed by this local “Discretionary” sales tax that will hurt consumers at low income levels and many businesses. The highest county sales tax in the state will drive businesses out or keep them from moving here – further hurting jobs and the economy. Here is how.
Electric, Phone Bills and Utilities are taxed – without a $5,000 cap.
Florida Statutes 12.054 (2)(b)2 indicate that the Local “Discretionary” sales tax applies to Utility bills WITHOUT LIMIT. This means your electric and prepaid phone plans will be facing an 8% sales tax, the highest in the state. Cities apply a variety of “utility bill taxes” on water, sanitation and standard phone and cable TV bills as well. It remains to be seen if the full 8% would apply to these, but given the tax hunger of local governments, it is likely every attempt will be made to tax them fully. Simply look at your utility bills to see what you are paying in local taxes now.
Any major company that seeks to build a plant, or relocate an office complex will have to pay 8% sales tax on the full cost of utility bills. What company would build a manufacturing plant in Pinellas County when building it in Manatee County will allow them to pay a 6.5% sales tax on their utilities instead of 8%? That could mean the difference of hundreds of thousands of dollars every year.
No $5,000 Cap on “bulk” items – each taxed separately to raise more money
In addition, the State Department of Revenue has determined that bulk items can be separated out for taxation purposes. A January 7, 2013 memo showed that a business must pay the tax on different colors of paint (white, yellow and blue) – the “paint” item can’t be listed on one line together and each large amount must be taxed separately. This will apply to all items – lumber sizes, roofing tiles of different colors purchased in bulk for a large housing development, different types of electrical wire by gauge. In other words, the county will be encouraged to find creative ways to apply the increased sales tax to as much as possible. This will make the cost of building in Pinellas even higher – further effecting development and jobs in negative ways.
No $5,000 cap on Commercial Real Estate Rents
Commercial rents are fully taxed at 8% regardless of amount (http://dor.myflorida.com/dor/forms/2009/gt800019.pdf ). This will discourage companies from renting commercial spaces in downtown St. Petersburg (recently vacated for instance by “Universal Health Care”) or anywhere else in Pinellas county. That will have bad ripple effects on the taxpayer subsidized and now empty parking garage next to that building. Why should a major corporation move their headquarters to Pinellas County when they will pay a sales higher tax on their commercial rent than in Manatee, Pasco or Hillsborough? This will also hurt jobs and development in the County.
Warranties on items purchased outside the county but that apply to items used in the county (e.g. on Cars, computers, phones, electronics and more) will be taxed at 8%.
The claim that light rail will improve commercial development is seriously hampered by the facts that businesses, private development and jobs will be seriously harmed by creating the highest sales tax in the state right here in Pinellas. For a train that goes from St. Pete to Clearwater.