The Florida Senate is considering lowering fees that car owners pay when they register their vehicles, a reversal from 2009, when lawmakers increased fees to raise revenue.
Sen. Joe Negron, R-Stuart, introduced the idea at a Senate Appropriations committee meeting Thursday, saying the state could pay for it by eliminating a multimillion-dollar tax break that insurance companies receive.
The insurance company tax break is one of several being highly scrutinized by lawmakers, who have been skeptical about the economic incentives programs used to lure businesses to Florida.
“When originally put in place in 1987, this benefit for insurance companies was well intentioned," said Negron, who chairs the Senate Budget Committee. "But times have changed and we need to reprioritize. We can take the revenue we save from eliminating a tax credit which benefits insurance companies and use it to reduce fees for every Floridian who drives a car.”
Vehicle registration fees jumped in 2009, and the amount of money collected for motor licenses doubled from $620 million to $1.2 billion. It currently stands at about $1.4 billion, according to state figures.
The insurance industry currently collects about $220 million a year in tax breaks through an economic incentive that rewards them for hiring and retaining employees. Negron proposes eliminating that tax break and using the money to reduce the fees Florida drivers pay on 18 million cars.
See the release from the Senate below:
Chair Negron Discusses Plan to Reduce Annual Vehicle Registration Fees
Tallahassee – During today’s meeting of the Florida Senate’s Committee on Appropriations, Committee Chair Joe Negron (R-Stuart) put forward a proposal to reduce annual vehicle registration fees for automobiles and light trucks. The reduction in fees would be implemented in a revenue neutral manner by eliminating a nearly 30-year-old tax credit that offsets a portion of the Insurance Premium Tax paid by Florida insurance companies. The proposal was formulated by Chair Negron during the course of the Senate’s ongoing Intensive Budget Review.
“The purpose of the Senate’s Intensive Budget Review is to assess current state spending to determine if we are appropriately focused on the needs of today’s economy and the priorities of today’s Senators,” said Florida Senate President Don Gaetz (R-Niceville) who supports the proposal. “In 2009, during a difficult budget year, the Legislature made the hard choice to increase certain fees associated with driving a vehicle in lieu of raising taxes, or taking draconian cuts to critical state services; however, times have changed and it is time that we reprioritize and evaluate ways to keep more money in the pockets of hard working Floridians.”
Chair Negron’s proposal would eliminate an outdated tax credit the State of Florida implemented in 1987 to benefit insurance companies. Currently, insurance companies receive a tax credit of up to 15 percent of the salaries of their Florida-based employees.
The funds saved by eliminating this outdated tax credit will offset revenue the state will lose by reducing fees associated with annual vehicle registrations. The proposal would roll back more than half of the 2009 increase to these fees. Annual vehicle registration fees were raised during the height of Florida’s economic decline in 2009, a year when state revenue collections had declined more than 25 percent since their high in 2006-2007. Reducing the registration fees is expected to save Florida taxpayers up to $220 million per year.
“When originally put in place in 1987, this benefit for insurance companies was well intentioned. But times have changed and we need to reprioritize,” said Chair Negron. “We can take the revenue we save from eliminating a tax credit which benefits insurance companies and use it to reduce fees for every Floridian who drives a car.”
“Ideas like the one Chair Negron put forward today are exactly what I had in mind when I asked the Senators to intensively review our base budget,” said President Gaetz. “I look forward to working with Chair Negron and the rest of our team as they continue their work to put together a fiscally responsible budget for the coming year.”
Chair Negron’s proposal will be formally presented in the coming days in the form of a proposed committee bill.