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Joshua Gillin
By Joshua Gillin January 25, 2016

2015 cell phone tax cut adds up for Scott

Gov. Rick Scott announced after his re-election that he wanted to cut a tax on Floridians' cell phone and cable bills by more than $120 million per year, and despite a budget meltdown in 2015, the Legislature obliged.  

In January 2015, Scott said he wanted to cut the state's communications services tax by 3.6 percent, which would have taken $470.9 million in tax revenue out of Florida coffers. This tax is based on a complex formula that includes a state tax on wireless phone and cable service to residents and businesses, a tax on gross receipts for services, a direct-to-home satellite service tax, and a local portion that varies from county to county.

Scott saw cutting the communications services tax as a way to help average Floridians. Going into the 2015 legislative session, the state portion was 6.65 percent for cable and phone and 10.8 percent for satellite. Scott wanted to reduce those taxes by 3.6 percent. His office said the change would save a family spending $100 a month on cable and cell phone services about $43 a year, or $3.58 a month.

With the 2015 Legislature deadlocked over how to deal with health care spending, reducing the communications services tax was not a priority for lawmakers. Still, the final budget passed during a special session included provisions to cut the tax, though not at the percentage Scott would have liked.

The cable and phone portion was cut down to 4.92 percent, while the satellite fee was shaved to 9.07 percent. The change amounted to a 1.73 percentage point reduction, or $20.76 a year on a $100 cell phone and cable bill. That's about half the percentage Scott said he wanted, but it still ended up being an estimated tax savings of a more than $200 million for consumers.

Even those of us who are terrible at math can calculate that this saves taxpayers more than the $120 million Scott promised to cut. And it could potentially end up being more.

Sen. Dorothy Hukill, R-Port Orange, has filed SB 256, a bill that would reduce each portion of the state tax a further 2 percentage points: cable and phone would be 2.92 percent, while satellite would be 7.07 percent.

That would amount to a total reduction of 3.73 percentage points over two years, slightly more than the reduction Scott wanted. Hukill's office said the financial impact on the state's annual tax revenues isn't immediately clear, but Florida TaxWatch gave a ballpark figure of about $230 million.

Kurt Wenner, TaxWatch vice president of research, said he doubts Hukill's bill will pass because Scott is asking for $1 billion in tax cuts in other areas and the Legislature just reduced the communications services tax rate last year.

"I wouldn't be surprised if the Legislature wanted to move on to something else," Wenner said.

Scott may not have gotten the 3.6 percent he said he wanted, but he did top $120 million in tax savings, which is what Scott promised to do in his second term. Since that's the case even if Hukill's bill doesn't go anywhere this session, we rate this a Promise Kept.

Our Sources

Tampa Bay Times, "Florida Senate panel approves $400 million tax cut package," June 11, 2015

Tampa Bay Times, "Consumers will get a $400 million tax break," June 15, 2015

MyWireless.org, "Florida Legislature Passes Wireless Tax Cuts in Special Session," June 16, 2015

South Florida Sun Sentinel, "Lawmakers pass $429 million tax-cut package," June 16, 2015

FloridaWatchdog.org, "Florida passes wireless tax cut," June 18, 2015

Florida TaxWatch, "Analyzing the Governor's FY2016-17 Budget and Tax Recommendations," November 2015

Florida Senate, SB 256, accessed Jan. 8, 2016

Florida Senate, HB 33-A, accessed Jan. 8, 2016

Florida Department of Revenue, Communications Services Tax, accessed Jan. 8, 2016

Florida Office of Economic and Demographic Research, 2015 Florida Tax Handbook, accessed Jan. 11, 2015

Florida Office of Economic and Demographic Research, Revenue Estimating Conference impact report, accessed Jan. 11, 2016

Interview with Jeri Bustamante, Scott spokeswoman, Jan. 8, 2016

Interview with Kurt Wenner, Florida TaxWatch vice president of research, Jan. 11, 2016

Interview with Elizabeth Fetterhoff, Hukill spokeswoman, Jan. 11, 2016

Joshua Gillin
By Joshua Gillin February 5, 2015

Scott asks Legislature to slash tax by $470.9 million

Gov. Rick Scott campaigned on cutting taxes even more in his second term, and he has started 2015 off with a doozy: Chopping a half a billion in taxes from cable and cell phone bills.

Scott in January announced he wanted to lop $470.9 million in state tax revenue off the books by cutting the state's communications services tax by 3.6 percent. The change is part of Scott's $77 billion budget proposal for the 2015-16 fiscal year, which includes a total of $673 million in tax cuts. He had promised to cut taxes $1 billion in his second term.

The tax, known as the CST, is a somewhat complex combination of a state levy on wireless phone and cable service to both residents and businesses, a tax on gross receipts for services, a direct-to-home satellite service tax and a portion imposed locally, which varies from county to county. Combined, the tax can top 16 percent of a consumer's bill.

Scott is proposing to cut the state portion of the tax by 3.6 percent, from its current 6.65 percent for cable and phone and 10.8 percent for satellite. The proposal doesn't affect the gross receipts portion, which pays into the state's Public Education Capital Outlay program. Nor does it change the amount of money counties would get from the tax. Counties would still be free to alter their own portion of the CST as they see fit.  According to his office, that will save a family spending $100 a month on cable and cell phone services about $43 a year, or $3.58 a month.

The tax has been a bone of contention among policy wonks because it is among the highest in the nation -- second or third, depending how you look at it -- and accounts for so much state revenue.

Kurt Wenner, vice president of tax research with the anti-tax advocacy group Florida TaxWatch, says the group has long supported cutting the communications services tax.

"We think it is probably the best way to give widespread, broad tax relief," Wenner said, pointing out TaxWatch is especially displeased with how the tax often is twice the local sales tax rate.

But when you take such a major revenue source away, government programs are going to feel it, said Karen Woodall, executive director of the Florida Center for Fiscal and Economic Policy, which advocates for programs that support low- and middle-income Floridians. She said taking that much revenue from the state budget would have wide-ranging effects on programs that would feel the crunch.

"It would make more sense if the lost revenue was replaced by closing corporate loopholes or ending narrow sales tax exemptions," Woodall said, pointing out the outsized benefits nonresidential customers would see from the cut. "It is also important to ask how much is going to individuals versus business. It might be better to help individual consumers on this one and leave business out of mix."

The Legislature considered a bill in 2014 that would have cut the tax, but in a different way and not by as much. Provisions from that bill, SB 266, didn't make it into a wide-ranging tax cut package, but the idea still has fans in Tallahassee, Wenner said.

"The size of the cut may be a little bit high for the Legislature, but I see a lot of support for reducing it," he said. A proposal to reduce the state's tax on commercial rent may complement an eventual cut to the communications services tax, he added.

Scott formally proposed cutting the tax in his state budget. The Legislature will consider the proposal when it begins its 2015 session on March 3. Until it approves a budget, we'll rate this promise In The Works.

Our Sources

Miami Herald, "Gov. Rick Scott promises $1 billion in tax cuts for second term," Aug. 29, 2014

Tampa Bay Times, "Gov. Rick Scott proposes cut in cellphone, TV taxes of $470 million," Jan. 20, 2015

Tampa Bay Times, "Gov. Scott proposes $77 billion budget with $673 million in tax cuts," Jan. 28, 2015

Office of Economic and Demographic Research, "Revenue Estimating Conference Impact Conference," Jan. 30, 2015

Tampa Bay Buzz, "Faceoff: Tax breaks for cell phone users, or commercial landlords?," Feb. 3, 2015

Gov. Rick Scott, "Let's Keep Working: Tax Cuts," accessed Feb. 4, 2015

Interview with Karen Woodall, Florida Center for Fiscal and Economic Policy executive director, Feb. 3, 2015

Interview with Kurt Wenner, Florida TaxWatch vice president of tax research, Feb. 4, 2015

Interview with Jeri Bustamante, Rick Scott spokeswoman, Feb. 4, 2015

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