Florida Governor Pushes to Reduce Commercial Lease Tax

Florida Governor Pushes to Reduce Commercial Lease Tax

Florida Governor Rick Scott’s proposed state budget now includes $100 million to support a reduction in the state's sales tax on commercial leases.

"As governor, my mission is to make Florida the No. 1 place in the nation to live, work, and play," Scott told a crowd of more than 50 area businesspeople gathered in Orlando. "Florida is the only state that imposes a 6 percent sales tax on commercial leases. That's why I'm proud to announce today that, as part of my 'It's Your Money Tax Cut Budget,' we propose a $100 million reduction in the sales tax on commercial rent," the governor said.

The economic impact of a $100 million reduction in this tax would provide a $500 million value to Floridians in terms of jobs and economic activity, research indicates. Currently, businesses in the state pay a tax on commercial rent and other lease-related charges, such as insurance premiums, property taxes, and common-area maintenance fees for such things as landscaping, janitorial services, and building repairs.

Florida Realtors (formerly known as the Florida Association of Realtors) has shown great support for the plan. Its 2014 President Sherri Meadows was on-hand for the governor's announcement in Orlando. "Most companies relocating to the Sunshine State are surprised to learn that Florida charges a 6 percent sales tax on commercial real estate leases," said Meadows, who is also chief executive officer and team leader at real estate firm Keller Williams in the Gainesville and Ocala areas.

"For Florida to be competitive with other states and online retailers, and considered pro-business by prospective employers and companies seeking to relocate, we must reduce—and eventually eliminate—the sales tax on commercial leases. Doing so will create jobs and is critical to our state's economic growth and development. We appreciate Governor Scott for recognizing the importance of reducing this tax," Meadows said.

Being the only state that has a sales tax on commercial leases puts Florida at a disadvantage for new business, according to Marian Johnson, senior vice president, political strategy for the Florida Chamber of Commerce.

"It does matter to industries and businesses," she said. "They take a look at these things, and it does weigh in their decisions to come here or not. Targeted tax reform is a priority for the Florida Chamber of Commerce. We stand behind Governor Scott because we believe eliminating this tax will encourage new jobs and help grow Florida's economy."

Two bills filed for the 2014 Florida legislative session would begin a phase-out of the tax: SB 176 by Sen. Dorothy Hukill (R-Port Orange) and HB 11 by Rep. Greg Steube (R-Bradenton) would lower the rate from 6 percent to 5 percent. Florida Realtors, NAIOP Commercial Real Estate Development Association, the Florida Chamber of Commerce, and other business groups have said they support the initiatives.

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