Floridians who buy items from out-of-state online businesses will be charged sales tax under a plan signed into law by Governor Ron DeSantis. The money from the taxes will go toward the state's unemployment trust fund. Business groups are excited to see the change.
Carolyn Johnson with the Florida Chamber of Commerce says her group is thrilled that DeSantis signed the bill into law. For the past two decades, she says the Florida Chamber has been trying to level the playing field between businesses in Florida and those outside the state. Johnson says right now, online retailers based in the state already collect a sales tax.
"But businesses that were not physically present in the state did not have that responsibility, and so businesses inside the state of Florida were at a 6% disadvantage," Johnson says.
Johnson says members would tell her organization that people would come into their stores, take pictures of products, and then leave.
"Which only indicates that they were going to go buy it online, so I mean this will really help our local main street businesses that are no longer at that disadvantage," Johnson says.
The new law steers revenues collected from online sales taxes into Florida's unemployment trust fund. Businesses pay taxes that go into that fund and were facing higher rates due to massive layoffs at the onset of the pandemic. Lawmakers agreed to offset those hikes with the new revenue stream, an estimated billion dollars a year.
"Which will mean for Florida's small businesses that their unemployment insurance tax will return to pre-COVID levels," National Federation of Independent Business in Florida's Executive Director Bill Herrle says.
Once the unemployment trust fund is replenished, the money from the online sales tax will go toward reducing the tax rate on commercial real property rentals. Herrle says that will provide relief to small businesses struggling to pay their lease due to the pandemic.
"This plan will provide a 60% reduction in rent taxes. That may be a few years out, though," Herrle says.
Florida law already requires people to pay an online sales tax, but if retailers don't collect it at the point of sale, it's up to the consumer to remit the unpaid money to the state. Few people do that. President and CEO of Florida Tax Watch Dominic Calabro says the new law shifts the burden off consumers for collecting the online sales tax.
"Removes the administrative headache. Removes the liability, removes the possibility that a Florida senior citizen, husband or wife, small business owner, would be liable for that obligation," Calabro says.
Calabro says that's a big win for taxpayers.
"It will now make people law-abiding citizens. It allows the state in the very first year to collect over a billion dollars that previously has been lawfully owed and uncollected and subject to penalties on a lot of unsuspecting Floridians," Calabro says.
Calabro hopes that once the unemployment trust fund is replenished and the commercial rent tax is cut, the money made from online sales taxes will go towards funding education.
