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January 31, 2006
Governor Bush Announces $1.5 Billion in New Tax Cuts for Floridians
TALLAHASSEE Governor Jeb Bush and Lt. Governor Toni Jennings today announced a $1.5 billion proposal to provide new tax cuts to Floridians. These recommendations continue the conservative fiscal policies that have spurred growth and increased revenues for Florida's priorities since 1999.
"The ingenuity and hard work of Floridians have produced a booming economy and a surplus of tax revenue," said Governor Bush. "In times of growth, tax dollars should be returned to working families and small businesses in Florida. We must remember that tax dollars belong to our citizens, not the government."
Governor Bush and Lt. Governor Jennings recommend the following tax relief for Floridians:
- School Property Tax Reduction $570 million
A 9 percent reduction in the "required local effort" property tax rate the tax rate the state requires local school districts to levy as part of the K-12 education funding formula will provide much needed relief to Florida's homeowners and property owners. Homeowners with the homestead exemption will save an average of $55 a year from this tax cut. Even with the tax cut, revenue from the property taxes will provide a 7.3 percent increase in local funding for public schools.
- Homeowners Tax Rebate $500 million
Part of the state's budget surplus resulted from taxes levied on escalating insurance, property costs and construction materials much of which has been paid by Florida homeowners. A one-time tax rebate of $100 for all resident homeowners and mobile home owners will provide much needed additional relief.
- Sales Tax Holidays $81 million
- Back-to-School Tax Holiday $40 million
Each July, the tax holiday on clothing and books less than $50 and school supplies valued at less than $10 saves Florida parents an estimated $40 million as they ready their children for the new school year. Governor Bush is today proposing to make this tax holiday permanent.
- Hurricane Preparedness Tax Holiday $41 million
Last year, Florida held its first Hurricane Preparedness tax holiday to help residents prepare for hurricane season. This holiday is part of a bigger plan to create a "culture of preparedness" in Florida. Having more Floridians prepared for a hurricane saves lives, protects property and reduces the cost of the government's response and recovery. Recently, Governor Bush announced his recommendation to make this holiday permanent, coinciding with National Hurricane Awareness Week in May.
- Back-to-School Tax Holiday $40 million
- Early Stage Venture Capital Tax Credits $75 million
Yesterday, Governor Bush announced his recommendation to provide $75 million in tax credits for early stage venture capital as part of a $630 million investment in Florida's economy to spur innovation and entrepreneurship. The new Florida Capital Formation Program will offer tax credits to provide a financial back-stop to private investors and lending institutions for investment in emerging enterprises in Florida.
- Sales Tax Exemptions for Machinery and Equipment $69 million
Florida's current policy of taxing machinery and equipment used in research and development activities and manufacturing is a competitive disadvantage to attracting and keeping those high-paying, ground-breaking sectors in the state. Most other states do not tax such items. To help level the playing field, a $26 million annual sales tax exemption for machinery and equipment to expand Florida manufacturing production is proposed. The plan also includes a $40 million annual exemption for all machinery and equipment used for research and development activities. Additionally, Lt. Governor Jennings announced earlier this month the administration's plan to provide full tax exemption on all production, research and development machinery and equipment used in the space and defense technology industries a savings of $3 million annually.
"These tax cuts will yield high returns for Florida's economy as we foster the growth of emerging technology industries," said Lt. Governor Toni Jennings, who served as Chair of the Governor's Commission on the Future of Space and Aeronautics in Florida. "Investing in the industries of tomorrow will ensure we continue to create high wage jobs for Florida's future generations."
- Energy Diversity Tax Credits $15 million
To meet the power and fuel needs of growing industries and an increasing population, Florida needs to have a reliable and cost-effective supply of energy. To promote development of alternative fuel technologies, Governor Bush is recommending time-limited tax incentives of $15 million annually in the form of sales tax exemptions and corporate income tax credits for hydrogen-fuel vehicles, hydrogen and other Clean Fuel filling stations, hydrogen fuel cells and the production of biodiesel and ethanol. These incentives are not only good for Florida's economy, but also for Florida's environment.
- Repeal of the Alcohol "By the Drink" Tax $51 million
Repealing taxes that are poorly and unfairly designed is important to the economy and to taxpayers. The repeal of this ill-conceived and difficult to administer tax will save an estimated $51 million for 20,000 Florida businesses. Repealing this tax will not harm the Children and Adolescence Substance Abuse Trust Fund, which is funded through a portion of these proceeds. Funding for the trust fund would come through a portion of the more efficiently collected Excise Tax on Alcoholic Beverages.
- Repeal of the Intangibles Tax $161 million
The repeal of the state tax on savings and investment has been a top priority for Governor Bush since first taking office. It is a counterproductive and unfair tax that penalizes people who save and invest for their future. It singles out less than 3 percent of the population and treats taxpayers with similar property values in drastically different ways. Eliminating the tax will benefit 300,000 taxpayers, who deserve fair and reasonable treatment when dealing with the state.
"Florida's families have worked hard and as a result our economy is strong and our state's revenues are at an all-time high exceeding all of our expectations," said House Speaker Allan Bense. "To be the responsible stewards we were elected to be, we should do three things with that unexpected money save some for the future, spend some on critical needs and return some to the people who sent it to us. That's why I'm proud to be here today to support Governor Bush's continued efforts to ease the burden on Florida taxpayers."
Floridians have worked hard to create a strong and vibrant economy. Totaling $1.5 billion, Governor Bush's recommendations will return tax dollars to parents working to provide for their families, seniors living on fixed incomes and small businesses that are the backbone of our economy. Additionally, this tax relief plan returns productive resources to the private sector, enhances Florida's economic competitiveness and improves the fairness of Florida's tax structure.
If these recommendations are approved by the Legislature, state and local tax relief granted to Florida's taxpayers since 1999 will total $20.3 billion.
For more information on Governor Bush's recommended tax cuts, please visit www.myflorida.com.