A communications services tax (CST) imposed on Floridians in 2001 by state lawmakers is being called a “burdensome and highly regressive tax on consumers” by Florida TaxWatch, an independent government watchdog group. TaxWatch released a report this week that shows a proposed tax cut in Florida’s CST would result in a savings of more than $100 million to the state’s consumers and businesses.
The report comes as proposed legislation that would reduce the CST moves through this year’s legislative session. A Senate bill (SB 1000), filed by Sen. Travis Hutson, R-St. Augustine, would reduce the state’s communications-services tax CSTand restrict the ability of local governments to collect fees from communications providers that use public roads or rights of way. The legislation is scheduled to be heard Tuesday afternoon by the Senate Community Affairs Committee.
A similar bill (HB 693) sponsored by Rep. Jason Fischer, R-Jacksonville is moving through the House.
The state imposed the tax when it enacted the Communications Services Tax (CST) Simplification Act in 2001.
“The CST is applied to cell phones, landlines, cable or satellite television, and multiple streaming services, which means it can hit consumers multiple times,” said Florida TaxWatch President and CEO Dominic M. Calabro. “Policymakers would be hard pressed to find a more justifiable way to provide broad-based state tax relief than a reduction in the CST.”
The state CST rate is comprised of both a sales tax (4.92 percent) and a gross receipts tax (2.52 percent). The rest is comprised of local taxes that vary among local governments, ranging from 0.3 percent to 7.6 percent, with median rate of 5.72 percent.
This puts the top CST rate in Florida at more than 15 percent and the median rate at 13.16 percent. When the federal Universal Service Fund (USF) charge of 6.44 percent charged on wireless phone service is included, the tax applied to Floridians’ cell phone bill can exceed 21 percent.
TaxWatch says that’s why the latest report by the Tax Foundation, which annually tracks tax rates on wireless phone services across the country, shows that Florida still has one of the highest tax rates in the country. The Tax Foundation report places Florida’s average wireless tax rate (combined state, local and federal) at 21.44 percent ranks, the 9th highest in the nation.
“This high rate makes the tax punitive and distortionary, and makes the state less competitive than other states, including the potential for reducing investment in broadband network infrastructure,” Florida TaxWatch says in its report.
The legislative proposals being heard in this year’s session would reduce the CST by 1 percent. The Florida TaxWatch report says that reduction would save Florida consumers and businesses more than $100 million a year.
“The CST is a tax on consumers, not communications services providers,” Florida TaxWatch says. “The proposed one percent tax reduction would save consumers and businesses $128 million annually. Reducing the highly regressive CST would benefit a wide range of Floridians, affecting virtually all individuals and businesses.”
TaxWatch has repeatedly advocated against the CST over the years.
In 2015, the Legislature reduced the tax, but Florida’s rate is still among the highest in the nation.