Bill in Florida Legislature proposes eliminating local business taxes – Daytona Beach News-Journal
For many communities across the state, local business taxes provide more than revenue for local governments.
The data collected helps planners ensure that businesses are operating within proper zoning, fire departments know when a safety inspection for a new business is needed and economic development departments keep track of what’s opening and what’s closing.
But a lawmaker whose family runs a small marina business in Southwest Florida has filed a bill taking aim at local business taxes. And the Volusia County Council, with a vote in November, has already eliminated its own local business tax.
Rep. Adam Botana, R-Bonita Springs, proposed House Bill 609, which would end a requirement of many businesses to pay counties and cities typically around $25, but sometimes much more, annually. He said small businesses are still smarting from the pandemic.
“People are trying to bounce back. It feels like a money grab for cities and counties,” Botana told The News-Journal. “They have their ad valorem tax. That’s how you’re supposed to raise money.”
Ad valorem − or property − taxes are the primary way local governments collect revenue to provide services residents demand. Eliminating user fees, such as local business taxes, will cause property taxes paid by homeowners to rise, some critics contend.
Botana’s bill does not yet have a companion in the Senate, but it has been assigned to the House Ways and Means Committee.
The chair of Ways and Means, Stan McClain of Ocala, believes it’s favorable, Botana said. And he said he met with a Florida League of Cities representative on Wednesday.
“We had a good conversation. The door’s open and we will be working together on this over this session,” Botana said.
Another factor that might be in Botana’s favor: Seven years ago, now-House Speaker Paul Renner filed a similar bill in 2017 proposing to keep local municipalities from levying any new business taxes. That bill failed to get a vote on the House floor.
Eliminating the tax in Volusia County
In November, the Volusia County Council approved an ordinance eliminating local business taxes come Jan. 1.
Councilman Danny Robins said he first proposed eliminating the business tax more than two years ago, but the discussion was delayed until August, after he had proposed it again. He called eliminating the tax “a layup,” an easy call.
“Every little bit counts. You add up $50 here, $100 there, $200 here,” Robins said. “Every little bit counts.”
At the August 15 meeting, Councilman David Santiago strongly seconded Robins’ motion.
“I always felt this was a money grab for the most part,” Santiago said.
“Small businesses are the backbone of the economy,” he said. “I want more businesses to start and have less barriers in place.”
Council votes to back Robins’ idea in August and a follow-up vote to pass an ordinance repealing the tax in November were unanimous. However, some council members raised concerns after hearing staff presentations detailing the utility of the business tax.
Business tax used for reasons other than revenue
Volusia County CFO Ryan Ossowski and Clay Ervin, director of Growth and Resource Management provided the council background on the tax, which was expected to generate about $464,000 for the county and $411,000 for its cities.
Ossowski said the current fees range from $3 to $2,586, depending on the type of business and its size. However, the most common fee is $22.
The tax does require two county workers to administer it full-time, so Ossowski said those employees will be reassigned to other positions after business taxes are no longer levied at the start of 2024.
Ervin said business tax receipts are “a stopgap” for his department, which screens the types of businesses and their locations against the county’s zoning regulations.
County employees also use the data on receipts to determine if building codes and fire and safety regulations are being followed, Ervin said. The tax is also helpful to determine whether impact fees should be levied and in regulating the state’s processing of hazardous waste, he said.
Local business tax remains in Flagler
Flagler County, which has not eliminated its local business tax, generates about $75,000 annually, County Attorney Al Hadeed said.
Three Flagler County cities also receive business tax revenue: Palm Coast, Bunnell and Flagler Beach.
For the county, the revenue is marginal, Hadeed said. The tax’s value is more oriented to data collection.
“It keeps us aware of the rate of economic development,” he said.
Because of the tax, the county can keep track of existing businesses, new businesses and the kinds of industries that are in operation. He also mentioned the safety data that helps the fire department to know what businesses need safety checks.
The Flagler County commissioners have not taken a position on Botana’s bill.
Wrapping up
Robins said the Volusia County departments that used the tax for data collection are working on a new way to capture that information.
At least one Volusia city official expressed some concerns about eliminating the tax. In an email to the council, Devlin Moore, finance director for Orange City, argued in favor of the municipal review of business operations and whether they comply with parking requirements, landscaping regulations and building and fire rules.
“Allowing a business to move in without these checks does a disservice to the general public, who relies on public occupancies to be safe, and to the business owner who may not realize some of the improvements that may need to be made prior to lease and occupancy of a building, and then be required to engage in unexpected, and perhaps unbudgeted, improvements,” Moore wrote.
He also noted that the administrative cost associated with the city’s review of businesses’ compliance is borne by the business taxpayer, as opposed to shifting the burden to payers of property taxes, writing: “This seems to be an equitable way of doing it.“
