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Senate moves to end insurance industry tax break

File photo
File photo (David McNew/Getty Images)

TALLAHASSEE, Fla. – Insurance-industry officials remained adamant Tuesday that a proposal to eliminate a decades-old tax credit will cost jobs and hike premiums as the measure moved forward in the Senate with a significant change.

The Senate Finance and Tax Appropriations Subcommittee unanimously supported the proposal (SB 378), which would eliminate a premium-tax credit for insurers. Under the change made Tuesday, the bill would also offer a 1 percentage-point reduction in a commercial lease tax for businesses, a tax cut that Gov. Rick Scott has supported.

Bill sponsor Anitere Flores, R-Miami, said that if the insurance industry tax credit -- created in 1987 -- was introduced today, lawmakers would label the proposal "corporate welfare" and that it "wouldn't have a snowball's chance in Florida of passing."

Eliminating the tax credit, which is linked to employee salaries that insurers pay in the state, has long been a goal of Senate President Joe Negron, R-Stuart. By also reducing the commercial-lease tax, the Senate would help balance a potential increase in tax revenue from eliminating the insurance credit.

But business lobbyists and insurance industry representatives indicated that the change in the bill does nothing to alleviate their contention that the proposal will drive jobs out of Florida and result in higher premiums for Floridians.

"Even the business owners that get a little break on their rent are going to pay high insurance premiums," said Paul Sanford, a lobbyist for Jacksonville-based health insurer Florida Blue. "Old Joe Lunchbucket is going to pay more for his auto insurance, more for his health insurance, more for his property insurance, so that business gets a 1 percent cut in the (commercial lease) tax."

Tom Koval with Sarasota-based FCCI Insurance Group suggested that moving insurance jobs out of state could be done without much difficulty.

"We are in Dallas, in Jackson, Atlanta, Indianapolis, we're now opening an office in Richmond, Virginia," Koval said. "When you balance the high level of tax rate that we have, against the premium tax credit, the salaries it gives us, it really isn't as much a subsidy as it is an incentive to bring people here."

The state Revenue Estimating Conference has projected that eliminating the insurance industry tax credit would generate $453.3 million in general revenue next fiscal year, with the annual amount settling to $299.6 million. The amount in the upcoming 2017-2018 fiscal year would be larger because it would include estimated payments for calendar-year 2018 premiums, according to a Senate analysis.

The bill initially proposed a cut in the state's communications-services tax to help balance the elimination of the insurance tax credit. But Finance and Tax Chairwoman Kelli Stargel, R-Lakeland, proposed the change Tuesday to include the lease-tax cut instead of the communications-services tax cut.

Scott proposed reducing the 6 percent commercial-lease tax as part of a $618 million tax-cut package he offered in January. Stargel said Tuesday's change would benefit small insurance agents who pay for commercial space but don't see the tax credits that insurance carriers receive.

But while business groups have lobbied for reducing the lease tax, they opposed the revamped bill. Associated Industries of Florida said in a release that even with the cut in the lease tax, the repeal of the insurance tax credit would be viewed as a "tax hike."

Flores called the arguments from the insurance and business lobbyists "baloney."

"Your insurance premiums are probably going to go up no matter what," said Flores, chairwoman of the Senate Banking and Insurance Committee. "Did your insurance premiums go down when we did (personal-injury protection auto insurance) reform that some of the folks here wanted and needed, and said our rates are going to go down by 25 percent? No."