February 28, 2002

Legislative Activity

Date: February 28, 2002

To: AAF Corporate Government Contacts

From: Clark Rector, Jr., Vice President-State Government Affairs

Re: Florida Tax Threat

On Wednesday afternoon (Feb. 27), State Senator Don Sullivan (R-St. Petersburg), chair of the education budget subcommittee, led a press conference to outline a new plan to repeal certain sales tax exemptions for 14 goods and services. His goal is to raise $1-billion in new taxes to fund what he refers to as "$1-Billon for a Better Florida."

The proposal is scheduled to be discussed in the Senate Appropriations Meeting Committee this morning (Thursday, Feb. 28) starting at 9:15 a.m.

According to Sullivan's news release, this latest scheme is designed to "pump $1 billion into Florida's education system by repealing a host of tax exemptions that benefit special interest groups." Sullivan is also quoted in the release as saying, "The goods and services I've targeted are those that are luxuries for most Floridians or just don't make any sense."

Following are just some of the "luxuries" the new scheme proposes to tax — presumably at the current 6 percent sales tax rate — which have direct, negative impact on the advertising industry:

  • Radio and television broadcasting rights and music license fees
  • Public relations services, management services, management consulting services, lobbyist services and political consulting services
  • Promotion-based advertising, such as coupon promotions and event-based promotions, such as golf tournaments and sports exhibitions
  • Computer programming services, systems design services, data processing services and other computer-related services.

Senator Sullivan's plan appears to be an attempt to keep Senate President McKay's services tax proposal alive. As you know, President McKay would like to repeal most sales tax exemptions and lower the tax rate to 4.5 percent from 6 percent. While McKay's plan passed the Senate, it was unanimously rejected by the Florida House of Representatives.

We will update you following the meeting.