Florida's quirky tax

THE State of Florida has drawn considerable flak on account of its new tax on services, and deservedly so. The tax, which has taken effect this month, is to be levied, at a rate of 5 percent, on services used in the state - advertising, legal counsel, and a host of others. The levy was passed to raise badly needed revenues in a rapidly growing state whose constitution forbids a personal income tax.

Note that the tax is on services used within the state. National advertisers, for instance, are going to be required to calculate how much of their ``product'' is ``consumed'' within the state, and pay 5 percent on the value of that portion.

Advertisers in an airline's in-flight magazine are to be required to factor in the proportion of Florida miles in the airline's route system in order to pay the proper tax for magazine ads seen in Florida airspace.

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There is more arcana where that came from. The legal fees of criminal defendants, for instance, are to be exempt except in case of conviction. Further questions abound as to whether the tax restricts free speech, and so on.

Now the passage of any tax that gets the bar, the press, and the ever-articulate advertising industry as riled up as this Florida tax has done would appear to be less than politically astute.

Officials in the broadcasting and tourism industries already estimate losses from canceled advertising and hotel reservations to run in the millions of dollars.

A tax on services is not necessarily bad, particularly in an economy like Florida's, where services are so important. Such a tax, like any consumption tax, tends to be regressive, and so adjustments should be made to compensate.

What doesn't make sense is the quirky way this tax is being handled, with multitudinous loopholes and almost surrealistic paper work hassles. It is never fun to pay taxes, but this sort of thing erodes public goodwill and invites avoidance and evasion.

Perhaps Florida should reconsider its constitutional ban on personal income taxes. Or it can look at real-estate or personal-property taxes.

Each state has its own economic situation, and so of course there will be variations in tax structures from state to state. But the United States is full of places so busy touting their low taxes or their no taxes as an incentive to economic development that no one notices that government services are inadequate or deteriorating.

Florida officials got a lot of mileage a few years ago out of a major national accounting firm's survey of business climates in which the Sunshine State came out on top. This year, however, Florida fell from No. 6 to No. 13 in the rankings, because public services have not kept pace with growth.

Florida needs to raise revenues, but it should support itself, and not try to get out-of-staters to pay its taxes.

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