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House Keeps Insurance Payroll Credit Alive, Phases DMV Cut

April 28, 2013 - 6:00pm

The insurance industry would get to keep a decades-old tax credit, and motorists would see a slight dip in vehicle-registration fees starting a year later than the Senate has proposed, under a House plan introduced Friday.

The House plan, introduced as an amendment to the Senate bill (SB 1832) as the proposal was brought before a special meeting of the Appropriations Committee, counters the "bolder" measure approved by the Senate on Wednesday.

The Senate measure would end a tax credit that covers 15 percent of salaries for nonlicensed workers that insurance companies employ in Florida and rolls back by 55 percent starting this year the controversial hike to vehicle registration fees imposed in 2009.

The House amendment by Rep. Steve Crisafulli, R-Merritt Island, maintains the tax credit and would gradually roll back the 2009 increase over a five-year period starting in 2014.

"The House sees things a little differently and this is the approach we've chosen to take," Crisafulli said. "Right now, this is something that fits within the framework of our state's current economic situation."

The insurance industry had opposed the proposal by Sen. Joe Negron, R-Stuart, to repeal the tax credit.

The Personal Insurance Federation of Florida has claimed eliminating the tax credit would increase payroll costs, an expense that would end up in rate filings. The American Insurance Association has argued the tax credit has incentivized insurers to hire Florida-based employees.

Negron said the issue will have to be worked out in conference, but said he had hoped the House would have agreed to discontinue the "antiquated" tax incentive that subsidizes the insurance industry.

"I was hopeful that as our economy improves and our budget picture is brighter we could pass some of that savings along to our constituents," Negron said.

"They have their way of addressing the issues," Negron continued. "I think my plan is much bolder and happens immediately, but that is what this process is about. We have a week left in the session and we'll keep working."

Negron's proposal is to balance state revenues by increasing the money generated from the insurance industry to offset the reduction in money that would come in from the registration fees.

The Senate proposal did not have a House companion and House Speaker Will Weatherford, R-Wesley Chapel, agreed to schedule the special committee meeting to discuss the plan.

Under Negron's proposal, motorists would have annually seen up to $224 million in savings starting in the next fiscal year. The savings per vehicle would have been $12 a year.

Crisafulli's proposal reaches the same per vehicle savings by 2019, with the revenue impact to the state starting at a collective $44.3 million a year in the 2014-2015 fiscal year. In the first year, the savings would be about $2.40 per vehicle, he said.

"It's not a great idea to exchange cutting jobs and raises taxes in order to cut fees," agreed Rep. Charles McBurney, R-Jacksonville. "It's better to just cut fees."

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