Friday, April 25, 2008

New development on the property tax front.

It's on. On November 2008, we will vote on a ballot proposal to cut property taxes by about 25 percent. 60% of voters should have to vote yes to pass the amendment.

It would apply not only to homeowners but also to businesses, second homes and commercial buildings. The lost revenue should have to be replaced by new taxes and existing taxes raises to be decided by our state legislators. We are talking about 9.5 billion dollars.

It would also establish a 5 percent cap on yearly assessment increase for non-homestead properties – businesses, investment, and second homes. In January 2008, voters have already approved a 10% percent cap.

The Taxation and Budget Reform Commission voted 18-7 to confirm the plan which was approved last month, mandating a cut of school property taxes in about $ 9.5 billion by the year 2010.

The main opposition to the plan has come from business lobbying groups, like the Florida Retail Federation, who threatened with a lawsuit to block it, and some legislators who argued it would lead to a huge tax increase. In effect, the amendments actually mandate a tax increase. The president of Associated Industries of Florida which represents most Florida large companies, affirmed that there was a "99 percent certain there will be a legal challenge" to try to block it from the ballot, and that it was "the biggest scam since the Florida lottery, being sold as a decrease of taxes when, who knows what it'll be?"

The tax swap of the education spending recourses that must be replaced by the new sales tax raises will go up to $ 11 billion, since it includes a provision to increase by 7.5 percent the K-12 spending for the next two years. Other critics of the plan affirm that this is another case of irresponsible improvisation or "creativeness" that, under the cover of helping property owners, will ultimately overburden those who can't even afford to buy a home.

Under the proposed amendment, Florida legislators will have to replace the schools revenue with some combination of raising the sales tax by one percent, doing away with sales-tax exemptions given to many industries, cutting spending, or levying new taxes.

Add to this proposal, another one that the legislature is considering, about capping property taxes to 1.35% of assessed value, supported by Marco Rubio, the Republican House Speaker.

Enough to get you dizzy? Of course. As long as you ignore the main issue. Cutting taxes, raising taxes, swapping taxes, cutting services, raising services costs, there are so many different ways to ignore a fundamental principle which is right in your eye: "You can't spend more than what you can afford". Our cities, our counties, our local governments are us. If we cannot limit their spending, we will have to pay for it.

They are spending too much, compared to what their more conservative policies had been in the past. All the new construction that has been approved by all our cities under the motto: "increase the tax base", has brought a large additional revenue that should have been more than sufficient to offset any additional services that they could be giving us.

A reasonable increase of our taxes in the same proportion as inflation during the last decade would have added enough recourses to these revenues.

If we are living in an unrealistic world of dozen of unnecessary cities, administrations, public servants, government pensions, bureaucracy, and what more, the only remedy is to reconsider this whole equation and adjust it.

Our middle class is suffering. Our economy, nourished in part by snowbirds and tourists is suffering. Real estate is at its lowest point in decades.

One of the main factors is high property tax, as are the high costs of property insurance in Florida.

It is time to address these issues honestly and with a vision to the future; Playing with tax-swapping, tax capping, tax cutting, tax increasing, is a dangerous game and a cul-de-sac avenue. Addressing the problems with a more efficient, honest and conservative handling of our public spending is the one and only alternative.

As would be my alternative if I had to balance my personal home budget with a fixed salary. I would have the choice of going deep in debt, or maybe try to rob my neighbors and go to jail, or reduce my standard of living, or live in a smaller home, eat less or starve a bit, or find a second job at night, or cut on my leisure expenses, or whatever you can imagine. But would I be able to play with my budget the way our elected representatives are doing?

Of course not; Because, as you guessed, I would end up bankrupt, insolvent, broke, bust, you name it.

April 25, 2008


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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