Florida Gov. Ron DeSantis (R) has approved a scaled-back tax package that authorizes two sales tax holidays and amends the calculation used to provide corporate tax refunds.
H.B. 7097, signed into law April 8, was introduced by House Ways and Means Committee Chair Bryan Avila (R). The legislation authorizes a three-day back-to-school sales tax holiday in early August and a seven-day disaster preparedness tax holiday at the end of May.
The original bill would have lowered the communications services tax by 0.5 percentage points and reduced the sales tax rate on commercial real property from 5.5 percent to 5.4 percent. However, those provisions were removed to reduce revenue reductions in the bill over concerns about how the COVID-19 pandemic will affect the state’s finances.
While the initial bill would have reduced state and local revenues by approximately $108.9 million in fiscal 2021, the final bill will cost the state an estimated $47.4 million.
Scott Shalley, president and CEO of the Florida Retail Federation, thanked DeSantis for signing the bill, saying the sales tax holidays are “needed now more than ever.”
"Not only do these important tax-free holidays provide relief to consumers buying necessities, but they will inject a shot of adrenaline into Florida's retail businesses after suffering through the COVID-19 pandemic and forced closures," Shalley said in an April 9 release.
The legislation also amends the calculation used to determine a taxpayer’s “final tax liability” to determine corporate income tax refunds due by May.
The refunds were created by legislation enacted in 2018 in response to changes under the federal Tax Cuts and Jobs Act. That legislation requires that any collections over adjusted forecast collections during fiscal 2018 are refunded to the corporations by May 1.
Democrats have questioned the prudence of issuing the refunds during the pandemic and sent a letter to DeSantis April 7 urging him to use his authority to cancel the refunds, which are estimated to cost the state about $543 million. However, Republicans have said they want to keep the refunds in place.
The bill also changes requirements for hospitals to qualify for charitable tax exemptions, updates the qualifying operations for the deployed service member tax exemption, creates new exemptions for affordable housing, and lowers the tax rate on surplus lines insurance.
H.B. 7097 will go into effect July 1.