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Tax Overhaul A Polarizing Proposal

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By Carl  Orth | The Suncoast News

Published: November 7, 2007

NEW PORT RICHEY, Fla. - NEW PORT RICHEY, Fla. - Opinions appear to becoming polarized over the proposed changes to the state's property tax system voters will see on the Jan. 29 presidential preference primary ballot.

"It gets my blood to boiling," Pasco County Commission Chairwoman Ann Hildebrand said of the proposed tax law overhaul. She believes the proposal still leaves too many inequities.

On the other hand, state Sen. Mike Fasano, R-New Port Richey, is an avowed strong supporter of the tax law initiative Floridians will decide the fate of in early 2008.

"The Florida Legislature has created a comprehensive package of tax relief that will be meaningful to a broad spectrum of Floridians," Fasano said.

There are four main changes to the state's property tax system that will be up for approval on Jan. 29:

• Doubling of homestead exemption, to $50,000, for all owners of houses that are a primary residence.

• Makes the Save Our Homes – a clause in the state constitution limiting annual increases in property assessments to no more than 3 percent or the Consumer Price Index, whichever is the lesser amount – transferable.

• A new exemption of $25,000 for tangible personal property to benefit primarily businesses, mobile home dwellers and renters.

• A new, annual cap of 10 percent on increases in the assessed value of businesses, apartment complexes or other nonhomestead property.

Hildebrand believes the tax reform proposal could wreck local governments for relatively meager savings per homeowner.

Pasco County had a difficult time cutting $15 million from its budget after the first wave of property tax rate cuts the Legislature ordered during it June special session, Hildebrand said .

The property tax constitutional amendment on the Jan. 29 ballot could take a much bigger bite out of the county budget, she predicted.

What rankles her the most, though, is that inequities will remain even if voters approve the reforms on the Jan. 29 ballot, Hildebrand believes.

Basically new residents and renters will continue to subsidize long-time residents with homestead exemptions, she thinks. Businesses might not see much of a property tax reduction either.

She predicts the tax reform constitutional amendment on the Jan. 29 ballot will not get the 60 percent majority needed for passage.

Hildebrand pointed out editorials in area daily newspapers support her viewpoint.
On the other side, Fasano still firmly believes the proposed tax law changes would help lower the tax burden for many Floridians.

The Save Our Homes program was created to keep the property taxes on homesteaded property from increasing dramatically as the home increased in value, Fasano noted.
Especially older residents feel trapped in their homes. They couldn't downsize to a smaller home because the taxes would skyrocket without the Save Our Homes exemption.

The proposed tax overhaul on the Jan. 29 ballot would allow "portability" of the Save Our Homes cap. The limit on assessment increases would be transferred if a resident purchases a home of greater value then their existing home.

If a home of lesser value is purchased, then a proportional share of the tax benefit is transferred.

"Portability gives Floridians the freedom to choose where to live and what sort of home to buy based on the needs of their families, not on a failed tax policy," Fasano said.

If voters approve the amendment, the current $25,000 homestead exemption will double to $50,000 for homes valued above $50,000. The exemption would remain at $25,000 for school district property tax levies.

More than 94 percent of Florida homeowners will enjoy tax relief under the increased exemption, Fasano predicts.

The proposed $25,000 tangible personal property exemption would "free over one million Floridians from filing this burdensome tax," according to Fasano.

If voters approve the proposed tax changes, businesses and owners of manufactured homes would no longer have to file a return if they have less than $25,000 in tangible personal property.

Tangible personal property, a class that excludes real estate, includes furniture, fixtures, tools, machinery, household appliances and supplies.

This change would exempt more than 1 million Floridians from the tangible personal property tax, according to Fasano. At present, about 1.2 million Floridians pay this tax.
Many Floridians actually spent more money complying with related paperwork than they owed in tangible taxes, Fasano noted. This proposed amendment will cut away that red tape, the lawmaker said.

For nonhomestead property, an annual cap of 10 percent on the assessed value of such property will be created. The cap will end at the time the property changes ownership.

The beneficiaries of this proposal will be small business owners, those who own second homes and renters who must pay the cost of increased taxes through increased rental fees.

Small business owners, second-home owners, renters, and others will benefit, Fasano predicts. No longer will property owners have to fear unexpected, large assessment spikes.

"Now the choice is exactly where it should be – in your hands," Fasano said about voters on Jan. 29. "You the voter will have the opportunity to approve this proposed amendment and provide much-needed property tax relief in our state."

Information from the Media General News Service was used in this article.

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