Florida Repeals Disputed 5% Services Tax

The Legislature repealed the state’s 5% services tax early today, after months of intense pressure from the advertising industry and angry, confused voters.

The legislation eliminates the tax on Jan. 1 and compensates by boosting the state sales tax from 5% to 6% on goods. The hike, effective Feb. 1, will bring in $1.2 billion annually.

“The people had a victory here. They got it repealed,” said Gov. Bob Martinez, the freshman Republican who initially championed the tax but reversed himself under intense attack from advertisers and other interest groups targeted by the tax.

Nationwide Protest

The 5-month-old levy on a wide variety of services provoked protest from across the nation because it taxed out-of-state services used by Floridians.

For example, companies buying advertisements in national magazines or from broadcast networks had to pay a tax based on circulation or audience in Florida. Conventions were canceled and some national advertisers stayed away.

At the same time, other economically pressed states considering a services tax hesitated after seeing the furor it created for Martinez and other political leaders in Florida.

$185 Per Family

Martinez’s budget chief, Glenn Robertson, said the additional sales tax will cost the average Florida family $185 a year compared with a first-year services tax burden of $75.

The sales tax on services, including advertising, pest control and lawn care as well as accounting, legal and engineering fees, took effect July 1 after winning bipartisan support in the Democratic-controlled Legislature.

But opposition built quickly. In September, Martinez capitulated and called for repeal in the face of a harsh advertising campaign that rallied public opinion against him.