Florida’s proposed sales tax holiday is misguided
College students don’t often have problems spending money when they have it. So what would you do with some extra cash? I am not referring to your student loan disbursement, your tax return or those gift cards you got for Christmas. No, I am talking about a large amount of money – say the $3.2 billion in tax revenue growth expected for the state of Florida in the next two years.
Suffice it to say, in an election year there is already political posturing on how to spend this added revenue that the St. Petersburg Times attributed to “a combination of spiking real estate values, population growth and hurricane rebuilding efforts.” Chairman of the House Budget Committee Rep. Joe Negron has proposed a sales tax holiday that, if passed, would be the biggest tax break in Florida history. It is worth noting that Negron is a Republican candidate for attorney general this year and could reap political benefits in his primary battle, which occurs shortly after this sale tax holiday would go into effect.
So how would his plan work? In the past the sales tax holidays were limited to low-cost school supplies and articles of clothing up to $50. As Florida Today reported, Negron’s proposal also “eliminates the state’s 6 percent sales tax on the first $5,000 of all personal purchases between July 31 and Aug. 6.” The cost for this proposal is estimated to be $460 million in lost tax revenue according to a report in the St. Petersburg Times.
On the surface, Negron appears to be a swell guy. After all, he is harnessing the behemoth of state government and returning the people’s money back where it belongs, right? But without a state income tax, giving such a large tax break ignores other crucial financial commitments this state has made to its people.
How about greater spending on education? Article IX, Section 1 of the Florida Constitution requires the state to provide “a uniform, efficient, safe, secure and high-quality system of free public schools that allows students to obtain a high-quality education.” It is not hard to find evidence that the state is not providing “high-quality” education.
The Constitutional Accountability Commission (a bipartisan commission) just last fall indicated that Florida was failing in this constitutional requirement. According to a St. Petersburg Times report about the commission, Education Week magazine ranked Florida 48th in per-pupil spending, the National Center for Education Statistics said Florida ranked 48th in graduation rates and the National Education Association ranked Florida 30th in teacher pay.
Ironically, the week that Negron’s proposal was outlined, Pinellas County school district superintendent Clayton Wilcox announced a cut of $19.6 million for the 2006-07 fiscal year. It is simple math to figure out why. As the St. Petersburg Times story explained, “the state funding formula will give Pinellas about $779 million in operating funds but the district projects expenses of $802 million.”
While I don’t suggest that increased funding alone will solve the state’s educational bottom feeding, I do think that increased funding is more important than a tax-free plasma television purchase in August.
Florida’s lack of educational funding has negative economic implications. This is at least one of the conclusions of a recent report from the LeRoy Collins Institute, an independent, nonpartisan and nonprofit organization based in Tallahassee. Its report – which was the subject of columnist Howard Troxler’s Jan. 10 column in the St. Petersburg Times – states that “low public-school investment and educational attainment create a reinforcing cycle with the low-wage economy” and “Florida is prolific in creating jobs but stalled in its efforts to make more of those high-value/high-wage.”
Those findings were personified in the same day’s Business section of the paper with a story about recent USF graduate Suzanne Block, whose 3.75 GPA in biomedical science has not translated into finding a job. While there is certainly no guarantee that recent graduates such as Block would find employment, increasing investment in Florida’s future in the classroom could pay off in attracting out-of-state businesses. Perhaps Negron needs to read Block’s story to realize his sales tax holiday proposal perpetuates Florida’s reliance on job growth in terms of call centers and tourist attractions.
Rather than simply giving taxpayers handouts to buy big-ticket items, our taxpayer money would be better served creating real, long-term economic growth that can be achieved through investment in education.
Aaron Hill is a senior majoring in economics.