October 2011 A proposed sales tax on improvements to leased property would have a major negative impact on Florida business and discourage many from leasing office, industrial and retail space in the State, according to Bob Zegota, Chairman of Government Affairs, Florida Gulf Commercial Association of Realtors (FGCAR).
Zegota characterized the proposal as “double taxation” since there’s already a sales tax on leases.
“Double taxing commercial real estate is a new picture of an old practice that has been occurring in Florida for years with common area maintenance fees,” Zegota said. “Now the Department of Revenue wants to impose a sales tax on the tenant while the tenant is already paying tax on the improvements through a lease. That is double taxation.” Full story at Maddux Report
Goodness gracious. What is the Florida Department of Revenue THINKING!? A tax on tenant improvements? This year, the Florida Legislature cut, cut and cut some more and that was before Gov. Scott unilaterally decided to increase those cuts. Apparently, they are beginning to feel like they cut bone, so there is a perceived need to generate more revenue. I get that. But, why tax tenant improvements? It makes no sense if your goal is to increase the job pool. Tenant Improvements are spent largely on tenants that are moving in to a new or different space than they currently occupy. Growing companies expand and with each new lease, there are costs associated with arranging the property in a way that is best suited for their business. These “improvements” could be as simple as paint or carpet….or they could be a massive build out that could cost as much or more than the original building shell.
This action is blatantly anti-business expansion….anti-job creation. So, why consider it? The answer is simple. Its an easy target. That is why. Doing my best Yogi Berra imitation… Tenants that haven’t moved in, don’t know what they don’t know. New commercial tenants are not an organized industry group, they don’t hire lobbyists, and they won’t march to “Occupy Tallahassee.” They probably won’t even know they are hit with this tax until they start considering moving. At that point, it is too late for them to do anything about it.
As a tenant rep, I deal with expanding businesses every day. They are a skittish group. One day they are full of confidence. The next day they aren’t. If “WE the People” make them comfortable, we increase the chances that they make that leap of faith, sign that new lease for more space AND?….Voila’ ADD MORE JOBS! Adding an additional tax to the Go/No-Go decision could be the proverbial straw that breaks the camel’s back in favor of No-Go. Do not place additional barriers on companies that are considering expanding…not right now.
This is a bad bill. It is harmful to growth. It is harmful to job creation. It is bad for the people of the State of Florida. Please contact your legislators and tell them to “KILL THIS!”
