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Deal Steering Online Sales Tax Revenues To Unemployment Trust Fund Gets Florida House Panel Approval

Unemployment, Jobs
FloridaJobs.org
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A screenshot of the home page of the Florida Department of Economic Opportunity taken 3/11/2021

Florida House and Senate leaders have reached a deal over a plan to tax out-of-state online sales. The plan calls for using the estimated $1.2 billion in revenue to replenish the state’s unemployment trust fund and lower the unemployment tax on businesses. The House Ways and Means Committee approved the proposal Thursday, turning some proponents of an online sales tax, into opponents of the unemployment issue.

That deal is far short of what a lot of people are wanting, which is a complete change to the way the state approaches unemployment, not just a revamp of the CONNECT system itself, but how the state grants benefits. The bill Sponsor, North Florida Republican Representative Chuck Clemons, calls the proposal a way to “level the playing field.” But Orlando Democratic Rep. Anna Eskamani argues it’s a tax break for businesses that doesn’t benefit workers.

“Why not make sure this money is spent on the people who did have the economic hardship than everyone? The approach right now Is that businesses that did have record profits in 2020…are getting a tax break and I think there’s a valid argument to make that when we’re talking about relief, we should focus on those who actually experienced the hardship.”

Eskamani tried to attach an amendment that would raise the unemployment benefit from its current $275-a-week for 12 weeks level. That’s among the lowest in the nation, and a proposition that Senate President Wilton Simpson has said he supports. But House Speaker Chris Sprowls doesn’t. The AFLCIO’s Rich Templin believes lawmakers are failing to address the bigger issue: that the state’s unemployment compensation system is broken. Templin blames businesses that lobby against unemployment premium hikes.

“In 2009 they came back and said don’t raise our premiums again. And the trust fund went insolvent, and we borrowed federal dollars. How did we replenish it? We replenished it by redoing the entirety of Florida’s unemployment …system by keeping people from being eligible.”

During the Great Recession Florida depleted the trust fund and had to take out a bond. Today, the trust fund is around $600 million, down from its post-pandemic high of $2 billion.

Templin notes the same business groups backing the unemployment trust fund replenishment have for years opposed online sales tax collections. Still, lawmakers like Land O’Lakes Republican Rep. Ardian Zika believe lawmakers have to address the unemployment trust fund issue, because businesses, many that have barely survived the pandemic, are now facing massive tax hikes.

Zika notes most businesses in the state are small -- not major corporations. Throughout the course of debate, lawmakers frequently cited the unemployment tax at $7, but Zika says that figure is far higher for new businesses, and any increases could put startups out of business.

“For the first 10 quarters the minimum tax rate is $189 in Florida for the first $7,000…When the first 10 quarters are completed, your account will be reassessed …and go up or down: as low as $7 or .001 or as high as 5.4%.”

Technically, Florida law already requires online sales tax collections but leaves it to the consumer to remit the unpaid money to the state if it’s not collected at the point of sale. Almost no one does that. The bill makes that transfer automatic, hence, the projected billion-dollar revenue boost to the state. But Lake County Republican Rep. Anthony Sabatini calls the decision to pair the unemployment trust fund issue with online sales tax collections, a tax increase on Floridians.

“We’re creating a new revenue stream, starting at a billion dollars, but will rapidly increase every single year. As you all know we all buy things increasingly more every single year online," he said.

The Florida Legislature has been on the fence about collecting online sales taxes for more than a decade, but the pandemic has put the issue at the center of debate because of the need to find money.