Florida Lawmakers Approve Out-Of-State Online Sales Tax Plan
It would require out-of-state retailers to collect and remit Florida’s sales tax, producing an estimated $1 billion a year in revenue.
A plan to use taxes on sales by out-of-state online retailers to help Florida businesses is heading to Gov. Ron DeSantis after passing the House and Senate on Thursday.
While some Democrats argued that working Floridians would be hurt by the proposal because of “regressive” sales taxes, the House voted 93-24 to approve the measure (SB 50). Hours later, the Senate voted 27-12 to give final approval.
If signed by DeSantis, the bill will require out-of-state retailers to collect and remit sales taxes on purchases made by Floridians, producing an estimated $1 billion a year in revenue for the state. The money would initially be used to replenish the state’s Unemployment Compensation Trust Fund, which became depleted during the COVID-19 pandemic.
After the fund is replenished, the revenue would be used to make a major cut in a tax on commercial rent.
“The intention of the bill at the very beginning was to help those that need it the most,” Senate sponsor Joe Gruters, R-Sarasota, said. “We're the only state that has this business rent tax. And it's going to help our retailers when they need it. Anybody that owns a business.”
The Senate voted 30-10 to approve the bill last month without the commercial-rent provision. That required the Senate to vote again on the bill Thursday after the House added the provision.
Senate President Wilton Simpson, R-Trilby, and House Speaker Chris Sprowls, R-Palm Harbor, had agreed to reduce the commercial rent tax from 5.5 percent to 2 percent.
Some Democrats argued the proposal would raise sales taxes on shoppers while the benefits would go to businesses.
“Those with the least to give will have to give the most,” House Minority Co-leader Rep. Evan Jenne, D-Dania Beach, said. “But they won't just be taxed for a nebulous increase. It will be very specifically to bail out the state's abysmal, failed unemployment system, that man-made swamp millions of Floridians had to and continue to trudge through.”
Republican have argued businesses pay taxes that go into the unemployment trust fund. Without the bill or some other way to replenish the fund, businesses will face continued increases in the unemployment taxes.
Before the pandemic, businesses paid $7 per employee in unemployment taxes. The rate went to $49 this year and could jump to $87.
Florida business groups have lobbied for years to try to require out-of-state retailers to collect and remit sales taxes, saying it is a matter of fairness. But past proposals failed because of concerns by Republicans that they could be viewed as increasing taxes on consumers.
Retailers that have a “physical presence” in Florida are already required to collect and remit the taxes. But retailers without such a presence don’t face the requirement when they make sales to Floridians, who are technically supposed to send in sales taxes on their purchases --- though few do.
“The bill not only levels the playing field between online retailers and main street businesses, but keeps Florida competitive by offering much needed tax relief by replenishing the unemployment compensation trust fund and reducing the ‘Florida-only’ business rent tax,” Florida Chamber of Commerce President and CEO Mark Wilson said in a statement after the bill passed.