Florida House Speaker proposes sales tax cut, sparking budget debate

TALLAHASSEE, Fla. - Florida House Speaker Daniel Perez said Wednesday he wants to lower the state’s sales-tax rate, trimming revenue by almost $5 billion a year.

‘This will not be a temporary measure; a stunt or a tax holiday’

What we know:

House Speaker Daniel Perez announced Wednesday his plan to permanently lower Florida’s state sales-tax rate from 6% to 5.25%, a move that would reduce state revenue by nearly $5 billion annually.

Perez directed Ways & Means Chairman Wyman Duggan to draft a bill next week to implement the cut. The proposal aligns with efforts to curb government spending, as federal pandemic relief funds have dried up.

The House and Senate are currently working on budget proposals for the 2025-2026 fiscal year, and tax cuts are expected to be a key part of negotiations.

What we don't know:

It remains unclear how the state will offset the revenue loss from the sales-tax reduction, especially given Florida’s reliance on sales tax to fund essential programs such as education, healthcare, and public safety. The Senate’s stance on the proposal is also uncertain, as Senate President Ben Albritton has emphasized broad-based tax relief but has not directly endorsed Perez’s specific plan.

Also, there is no clear timeline for when the proposed tax cut might take effect if approved.

The backstory:

Florida lawmakers have been warning about the need to rein in spending, in part due to the depletion of federal COVID-19 relief funds that had temporarily boosted state revenues.

Governor Ron DeSantis and some legislators have also pushed for property tax reductions, though critics argue that such measures could lead to increased sales taxes to compensate for lost revenue. Meanwhile, DeSantis has proposed $2.2 billion in tax cuts, largely targeting business taxes and temporary sales tax holidays on various consumer goods.

Big picture view:

With no state income tax, Florida’s budget heavily depends on sales-tax revenue. Cutting the sales-tax rate could provide relief to consumers but may also lead to budgetary constraints affecting public services. The House budget proposal is expected to come in lower than the current $116.5 billion state budget and DeSantis’ $115.6 billion plan for the next fiscal year. This marks the first time since the Great Recession that lawmakers are proposing a budget that spends less than the previous year.

Timeline:

The House and Senate are in the early stages of budget negotiations, which must be finalized before the new fiscal year begins on July 1, 2025. Perez’s bill to cut the sales-tax rate is expected to be introduced next week. The House also voted Wednesday to override four of DeSantis’ budget vetoes, reinstating $4.74 million in funding for various projects. It is not yet known whether the Senate will follow suit.

What they're saying:

House Speaker Daniel Perez emphasized the permanent nature of his proposal, stating, "This will not be a temporary measure; a stunt or a tax holiday. This will be a permanent, recurring tax reduction."

He also defended the effort to limit spending.

"For the first time since the Great Recession, we will roll out a budget that actually spends less money than we did in the prior fiscal year," Perez said. "Of course, the special interests will say the sky is falling and the world is ending. But it won’t, and it’s not. They have lost sight of the difference between our state’s needs and their wants."

Albritton’s spokesperson, Katie Betta, signaled alignment between the House and Senate on tax relief while leaving room for further discussions.

"The Senate budget prioritizes broad-based tax relief, debt repayment and reserves, while reducing per-capita spending. The president has tremendous respect for the speaker and looks forward to partnering with the House on a significant, broad-based tax relief package to make sure Florida families can keep more of the money they earn."

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