Wednesday, March 19, 2008

The Taxation and Budget Reform Commission has approved a proposed amendment on March 17, 2008. It would go on the November 2008 ballot.

Basically, it would reduce property taxes by 25% in 2011, eliminating the $9.6 billion that school districts must collect in order to qualify for state aid. This reduction would benefit resident and non resident owners as well.

The loss of revenue would be substituted by a 1 percent additional sales tax and/or levying sales tax on products and services that are not presently taxed, as well as a package of spending cuts.

Raising 1% the present sales tax would yield a maximum of $ 3.9 billion. How will a new sales taxes on some services be implemented, has not been determined. However the proposal excludes levying a sales tax on the presently exempted food, medicine, health care and electricity. The general opinion is that new taxes on services such as legal and real estate work, dry cleaning, pet care, and similar, would probably have to apply.

Against the proposition is the Associated Industries of Florida, a business lobbying group.

Since the proposal mandates keeping school funding at the current levels, lawmakers would have no choice except to trim the state budget to offset the loss of property tax revenue.

Some of the possible targets:

- Reducing state-covered health coverage to thousands of low-income children and pregnant women

- Eliminating a Medicaid program for 125,000 seniors and disabled residents, or reducing nursing home and hospital payments,

- Axing the state's medically-needed program which helps thousands of transplant and gravely ill patients.

Of course this has raised serious objections. The general opinion is that a heavier sales tax disproportionately hits the poor.

Now let's analyze this remedy as opposed to previous attempts.

Everybody seems to have forgotten the general sentiment that cities and counties, which have been unduly favored by the unusual raise in property values, as well as thousands of new homes built since 2000, should adjust their budgets. Nobody is mentioning raising this anymore. We just try to reduce the property tax burden by reducing state services to the needy, and hitting the common citizen with heavier sales taxes. That is the bottom line.

Do I agree with the new proposal? As a realtor, I should be happy, since it might somehow reignite the business by attracting out of state real estate buyers and investors, due to lower property taxes. As a citizen, I might have an issue.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website: http://www.condo-southflorida.com
where you can search for Aventura Condos, Florida Condos, Sunny Isles Condos.



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