ISSUE: Should Florida eliminate the current sales tax on manufacturing machinery and equipment?

DISCUSSION: The state of Florida currently assesses a sales tax on machinery and equipment purchased by manufacturing businesses, many of which directly supply the retail industry in Florida. There is a limited exemption from the sales tax for machinery and equipment purchased to expand an existing business, subject to certain reporting requirements. Florida currently ranks 44th among states in terms of the state workforce employed in manufacturing, and 47th in gross state product attributable to manufacturing. One reason is that Florida taxes manufacturing capital through its sales taxes on machinery and equipment. This reduces the amount that may be invested by manufacturing firms, and discourages the location of new manufacturing facilities in Florida. Eliminating the state sales tax on manufacturing machinery and equipment will reduce manufacturing taxes by about $141 million annually, enhancing the economic output of manufacturers and reducing the cost of goods.

POSITION: The Florida Retail Federation supports eliminating the current sales tax on manufacturing machinery and equipment to allow Florida’s existing manufacturers to reduce costs to expand and make additional capital investments.

RELATED BILLS:

SB 518 - Hukill
HB 391 - Magar

Recent Developments:

(5/3/2013) HB 7007 passed, eliminating the sales tax on manufacturing machinery and equipment.

The Finance and Tax Subcommittee of the Florida House, chaired by Rep. Ritch Workman (R-Melbourne), has just approved a committee bill to close the Internet sales tax loophole in Florida.

The bill helps create a level playing field for sales tax collections by all retailers, and provides that any additional revenue the state of Florida collects as a result of the legislation will be used to reduce state taxes with a sales tax holiday.

Read more: FRF Breaking Legislative News

The Finance & Tax Subcommittee of the Florida House of Representatives, chaired by Rep. Ritch Workman (R-Melbourne) has filed an e-fairness committee bill to help create a level playing field for sales tax collections. We appreciate Rep. Workman’s leadership on this issue, and look forward to supporting this bill as it progresses.

This is good legislation to close the Internet sales tax loophole. This loophole currently puts Florida Main Street businesses at a disadvantage to remote sellers who are not collecting and remitting sales taxes to the state.

Read more: E-Fairness Update