One of the mainstays of each legislative session is how lawmakers will act to improve the business climate of the state. Cutting taxes on individuals and its impact on the economy go hand-in-hand with the concept of “economic development.” Despite a tough budget year, the legislature did make some strides forward in both of these related areas.
On July 1 the provisions of HB 7087 will become law. This wide-ranging economic development package assists such diverse industries as aircraft maintenance companies, packing houses, filmmakers, oil drilling companies and distilleries.
One method of providing economic development assistance is through the issuance of tax credits. A good example is the New Markets Development Program. The program received an increase of $66.3 million in tax credit authority for qualified applicants.The program was created in 2009 to encourage capital investment in low-income communities by investing in businesses in those communities. HB 7087 also increases film tax credits for the Entertainment Industry Financial Incentive Program by $42 million for distribution in 2015-16.
The legislation also created new sales tax exemptions for various industries. A sales tax exemption for electricity used in packinghouses for fresh fruit and vegetables and for meat from cattle and hogs was instituted. A new sales tax exemption was created for certain items used to manufacture aircraft and gas turbine engines. Current law exempts sales tax for labor charges and parts used to repair aircraft weighing more than 15,000 pounds. This bill drops that threshold to aircraft weighing more than 2,000 pounds. Additionally, a sales tax exemption was created for vehicles-for-hire that are designed to transport eight or fewer physically disabled persons and for any after-market conversion costs. The bill also lowers the threshold for manufacturers to qualify for a sales tax exemption for machinery and equipment.
In addition to sales tax exemptions and tax credits, HB 7087 makes other positive changes to a variety of businesses in Florida. It allows distilled spirits greater than 153 proof to be manufactured in Florida for sale outside of the state. The severance tax rate for oil recovered from new wells in fields discovered prior to 1981 is lowered. Florida vendors will get a 5% preferences for purchases of printing services and tangible personal property by state agencies, universities, colleges and school districts.
While the vast majority of these credits and exemptions are enjoyed by companies, the most anticipated tax program for consumers is each summer’s sales tax holiday on back-to-school items. This annual program allows individuals and families to purchase clothing, shoes, textbooks and school supplies tax free from August 3- 5. Many families wait until this time of year to purchase these items due to the savings they receive by not paying sales tax.
The intent of the tax credits and exemptions created and expanded each year is to spur Florida’s business community to grow and prosper. Hopefully the savings will trickle down to the average consumer via lower costs in the products and services offered, increased wages and, most importantly, the generation of new jobs.
I welcome your questions about the legislative process, state government or any related matters. Please feel free to leave your questions in the comment section and I will answer them in an upcoming post. If there is a specific topic you would like me to write about please let me know as well.