Economic Downturn Dooms Florida Hurricane Supplies Tax Break

By Michael Peltier
July 14, 2008

Economic woes have forced Florida lawmakers to ax a pair of popular tax breaks as parents prepare to return their children to school next month and the state readies itself for hurricane season.

Prompted by dismal revenue projections, Florida lawmakers earlier this year eliminated two tax holidays as they try to balance a state budget hamstrung by a frigid housing market, fallout from the subprime lending crisis and the rising price of oil.

Florida residents accustomed to a 10-day sales tax reprieve on back-to-school supplies will not benefit from a holiday that last year saved them about $41 million thanks to a temporary suspension of the state's 6 percent sales tax.

Also gone is a similar tax holiday on hurricane supplies. That $12 million break, in place since the devastating hurricane seasons of 2004-2005, was also jettisoned in May as lawmakers tried to fill holes in a 2008 budget of $65 billion that was nearly $6 billion less than the previous year.

The loss of the back-to-school holiday, a perennial tax holiday put in place by former Gov. Jeb Bush, was especially troubling to businesses, which benefited from additional purchases that were not exempt from state sales tax.

"What the legislature never considers is the tax increases that are paid by people who buy other things," said Rick McAllister, president and chief executive of the Florida Retail Federation. "There is a lot of shopping going during that period."

Supported by Gov. Charlie Crist and the Florida House of Representatives, the tax break died in negotiations with the state Senate, which did not include the holiday in its budget proposal.

(Editing by Jane Sutton; Editing by Dan Grebler)