States are losing billions to Internet sales. Enter a little known tax passed in Florida in 2001. It’s called the substitute communications tax, and it could actually end up taxing your office phone or computer system.
This tax is so complicated, not even the state Department of Revenue can figure out how to collect it, or on what, but business leaders who want it off the books tell of potential horror stories.
Rick Kearney, Chairman of IT Florida, says, “We’ll be driving away jobs; it’s the broadness and the vagueness of the tax language that’s really the problem."
The state House has already voted to repeal the substitute communications tax, but the Senate just wants to put a moratorium on the tax until 2007, when Senate President Tom Lee says the state could have the authority to tax Internet sales.
Sen. Tom Lee, (R) Brandon, says, "It’s a strategy that I think will keep everybody at the table for 2007. We are obviously going to have to revisit communications services taxes in Florida."
But tax will put Jeb Bush and the Senate President Tom Lee against each other.
"I am for the elimination of the tax. It’s a small amount of money, but it does bring stability to our tax code and I think a majority of the senators are also for that," says Gov. Bush.
The irony is that while business wants the substitute communications tax killed, most also want to start taxing Internet sales someday, creating a dilemma over what they should do next.
The state Department of Revenue held a series of workshops on the substitute communications tax and concluded it should be abolished.