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Florida

Gov. Scott backpedals on corporate tax campaign promise


Published:   |   Updated: January 28, 2014 at 07:26 PM

TALLAHASSEE – As Florida Gov. Rick Scott gears up for re-election he appears to be jettisoning, for now, one of his main campaign promises from four years ago.

Scott’s maverick bid for the governor in 2010 centered on his pledge to revive the state’s moribund economy through a mixture of tough medicine that included deep spending cuts and large-scale tax cuts to help the state’s businesses. That message propelled him through a Republican primary where he defeated the candidate backed by party leaders and helped him narrowly beat the Democratic nominee.

A key part of Scott’s “7-7-7” plan to create 700,000 jobs was a promise to completely eliminate within seven years the corporate income tax or the “business tax” as Scott repeatedly called it.

But this year - even as the economy has improved and state revenues are up - Scott is turning away from the tax cut that he once made a centerpiece.

Scott is pushing for more than $500 m illion in tax and fee cuts for the coming year, but most of them would impact the pocketbooks of voters directly. During a stop at a hardware store in Orlando today, Scott recommended a cut in the sales tax paid on commercial rent.

When asked about the fate of the corporate income tax cut, a spokesman for Scott said the governor would present his full budget recommendations on Wednesday. The Florida Legislature will use the recommendations as a starting point for a new state budget when the annual session starts in March.

“Gov. Scott looks forward to presenting the ‘It’s Your Money Tax Cut Budget,’ which cuts taxes by $500 million, reduces state debt and eliminates government waste - so that families can pursue their dreams in the Sunshine State,” said Frank Collins in an emailed response.

Scott’s decision to recalibrate his tax cut proposals comes after he encountered firm resistance from the Republican-controlled Legislature the last three years. Scott has also been confronted by lackluster poll numbers where a majority of Floridians have disapproved of the job he has been doing.

Scott came into office with the strong backing of the tea party movement and initially proposed cutting the state’s corporate income tax - which has been in place since the ‘70s - by nearly $1.5 billion over a two year period.

State legislators hesitant to embrace such a large cut while also cutting spending on schools and health care decided instead to exempt smaller businesses from paying the tax. The tax is expected to generate $2.1 billion for the state in the budget year that ends in July.

This year Scott and legislators have a projected budget surplus to work with. Scott has called for using part of that surplus to roll back $400 million in auto registration fees that were raised when former Gov. Charlie Crist was in office. Scott has also asked legislators to approve a 10-day back-to-school sales tax day holiday as wel l as a sales tax holiday for hurricane preparation supplies.

Scott’s last big tax cut proposal for this year is a pledge to cut by one-half of 1 percent the sales tax charged on commercial rents. The Scott administration estimates the cut would save businesses about $104 million a year.

“This reduction will make it more affordable for businesses to lease space, so they can keep more of the money they earn and create more jobs,” Scott said in a written statement Tuesday. “Florida is the only state that imposes this tax, and we must keep working to make Florida the best place in the world to start and grow a business.”

Rick McAllister, president and CEO of the Florida Retail Federation, praised Scott’s newfound enthusiasm for the sales tax holidays favored by stores and retailers. McAllister refused to criticize Scott for his initial focus on corporate income taxes, but acknowledged they had limited appeal.

“Remember, corporate incomes taxes affect very few people,” McAllister said. “Most small businesses don’t pay corporate income taxes.”

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