A work group has officially recommended that Florida do away with its “Communication Services Tax” and replace the $1.5 billion in revenue by raising the state’s sales tax from 6-percent to 6.34 percent.
The communication services tax, which is levied on things like home phone service and cable television, comes in at an average of about 14.21 percent, according to the Department of Revenue, which led the working group.
In a Jan. 31 letter to Gov. Rick Scott and Legislative leaders, members of the work group recommended increasing the state’s sales tax and repealing the CST in order to level the playing field in the marketplace.
According to estimates from the working group—which consisted of four members from the communications industry and four representatives of local government—the proposal could save money for some consumers.
Those estimates, however, come from a government affairs firm that represents several major telecommunications companies. Telecoms have long pushed for changes to state taxes on their products and services, and could stand to save millions of dollars under the change.
According to the numbers presented to the work group, a “typical” household might save $190 per year by eliminating the CST and paying higher sales taxes. Small businesses could also save money. The Department of Revenue said that it did not have appropriate data to conduct an independent study and that further research needed to be done to figure out the full pocketbook-impact of the recommendation.
The proposal would still need to iron out a few issues, including how to pay for bonds and how to share the revenue from the higher sales tax with local governments.
The work group was created by legislation in 2012 that cut some taxes on communications services. The work group found that changes in technology have made the CST outdated, and it is “no longer a reliable source of funding for state and local governments.”
The 8-member work group acknowledged in its report that it did not get input from consumer advocates at any of its meetings.
“The Working Group did not have presentations or receive input from any organization representing the interests of consumers,” the report reads.
Florida’s sales tax was raised from 5 percent to 6 percent in 1987 and has not been raised since.