A proposal that would start the ball rolling toward eliminating property taxes in Florida was heard this week in a House committee. It seeks a study to determine how much money would disappear and how local governments might recoup that revenue elsewhere.
“This bill (HB 1371) is about one thing. It's about starting down the road toward phasing out and eliminating Florida's property tax," said Rep. Ryan Chamberlin, R-Ocala.
He told the House Ways and Means Committee his bill would direct the research arm of the Legislature (OPPAGA) to conduct a study about what it would take to replace property taxes, which fund local government services like schools and roads.
Florida already has no state income tax. If property taxes go away, that money must be made up somehow. Rep. Joe Casello, D-Boynton Beach, noted that likely means a significant increase in sales taxes.
“So by eliminating the property tax which all municipalities count on, we could possibly have, would you say, one of the highest sales taxes in the nation to compensate for that loss?” Casello asked. Chamberlin responded, "I believe this is going to actually lower the overall taxes on most Floridians if we do it properly. But the truth is, there will be another tax to replace this property tax to eliminate us renting our property forever.”
Rep. Rick Roth, R-West Palm Beach, called the measure an affordable housing bill. "If we can change the way we collect taxes in the state of Florida and not tax property, I think we'll have more people being able to own property," said Roth. He suggested rent would also go down since rental property owners wouldn't be paying property taxes.
Rep. Susan Valdés, D-Tampa, called it an interesting idea. But she‘s concerned about what a potential jump in the sales tax rate would do to low wage workers.
“Let's say the taxation rate, I'm just gonna throw a number out there, let's say it's 30%," Valdés said. "For a person that works minimum wage, that's 30 cents to every dollar. That's a lot.”
It’s been a while, but the notion of eliminating property taxes has come up in the Florida Legislature before, and it has never gotten far. In fact, no state has banned property taxes. Rep. Anna Eskamani, D-Orlando, says there are good reasons for that.
“It is unsustainable in times of economic recession when people do not buy things, and that has happened before- 2008 as an example, and so that is a real concern," Eskamani said. "There's also challenges when it comes to just incentivizing local governments to maintain property values. If you get rid of property taxes, what is the incentive for local governments to even maintain property experiences? So you're eliminating a potential incentive there.”
She added that a higher sales tax will lead to consumers spending less money, thereby leading to less revenue for municipalities. That didn’t persuade Rep. Webster Barnaby, R-Deland.
“If you do not pay property taxes, that house is not yours. You're renting it from the state.”
Barnaby says the issue is about fairness because anyone who doesn’t pay their property tax stands to lose their home, even if it’s fully paid for.
“This is not about how we take care of cities and municipalities. This is about fundamental fairness to Floridian taxpayers," Barnaby said. "Do you own your house? That's the question, and I want to know that every Floridian who has finished paying their mortgage owns their house.”
The bill passed its first committee stop 15 to 6, and the vote was not entirely long party lines. There is no Senate version of the bill.
The House proposal would require the results of the study to be submitted to lawmakers by February 1st of next year. That would give them the opportunity to act on it during the next annual session.
