Opportunity nearly lost

Palm Beach Post Editorial

Saturday, March 01, 2008

What if the state eliminated the local share of property taxes for schools - about $8 billion - and replaced half of it with a 1-cent sales tax increase? That would be good for real estate, bad for tourists.

And what if, to raise the other $4''billion, the state taxed more sales - of items exempted in an archaic system - to raise $2 billion, but the rest of the money to replace the school revenue would come from...budget cuts.

That would take more from the needy and the elderly, the biggest losers in an already slimmer state budget. That's the thinking of the Taxation and Budget Reform Commission, which is wasting its opportunity to update the state's outmoded tax structure.

The commission, which must recommend statutory or constitutional changes by May 8, could position the state for a new period of growth with some common sense. Leading the charge against common sense, though, is Patricia Levesque, executive director of two education foundations established by former Gov. Bush. Ms. Levesque took a reasonable proposal from former Senate President John McKay that would have tapped the potential of a sales tax on services, and turned it into that trust-us, tax-cutting suggestion.

Mr. McKay advocates taxing services, which make up nearly half of all consumer spending. It could produce about $24 billion a year, matching existing sales tax collections. But Mr. McKay's proposal, calling for just $2 billion in service taxes, was derailed by Ms. Levesque. The argument that customers of lawyers, accountants and architects will go to Georgia to avoid a 6 percent tax has achieved almost magical reverence in Tallahassee. One of the true believers is House Speaker Marco Rubio, R-West Miami.

The Taxation and Budget Reform Commission is supposed to be more removed from politics than the Legislature, but this commission seems driven by politics. The hostility toward Mr. McKay's idea is a new version of the cowardice shown in 1987, when Gov. Bob Martinez and the Legislature repealed a services tax six months after passing it - and increased the sales tax to 6 percent.

The debate boils down, Mr. McKay says, to a choice between cutting services for the needy or ending a special interest tax exemption. The commission's most recent committee vote indicates that it prefers the former. That would be bad for Florida - all of Florida.

Palm Beach Post