REVENUE ESTIMATING CONFERENCE Tax …edr.state.fl.us/Content/conferences/revenueimpact/archives/2016/...(a) The sale of a new plug-in electric vehicle is exempt from the tax imposed

REVENUE ESTIMATING CONFERENCE Tax: Aviation Fuel Tax Issue: Capital City Refund Bill Number(s): Proposed Language Sponsor(s): N/A Month/Year Collection Impact Begins: July 1, 2016 Date of Analysis: 3/01/15 Entire Bill Partial Bill: Section 1: Narrative a. Current Law: Currently, Part III of Chapter 206, F.S., requires an aviation fuel tax of 6.9 cents per gallon is applied to all aviation

fuel purchased in the state, except for aviation fuel placed in bond under the control of the Department of Treasury, U.S. Customs Service, or aviation fuel sold for use in aircraft owned by the Federal Government. All tax revenue collected from the sale of aviation fuel is deposited in the Fuel tax Collection Trust Fund and then transferred to the State Transportation Trust Fund monthly after deducting the service charges imposed by s. 215.20, F.S., the refunds granted pursuant to s. 206.9825 and s. 206.9855, F.S., and the administrative costs incurred by DOR. Under s.206.9855, F.S., a carrier transporting persons or property for compensation or hire by air is entitled to receive a refund of the taxes imposed by this part of aviation fuel purchased by such carrier. The refund may not exceed 0.6 percent of the wages paid by the carrier to employees located or based within this state and who are covered by the provisions of chapter 443, F.S. Under s.206.9825, F.S., any licensed wholesaler or terminal supplier delivering aviation fuel to an air carrier offering transcontinental jet service and, after January 1, 1996, increasing the air carrier’s Florida workforce by more than 1000 percent and by 250 or more full-time equivalent employee positions, may receive a credit or refund as the ultimate vendor of the aviation fuel for the 6.9 cents excise tax previously paid, provided the air carrier has not facility for fueling highway vehicles from the tank in which the aviation fuel is stored.

b. Proposed Change: Adds subsection 206.9825(7), F.S., to grant a quarterly refund of the aviation fuel excise tax on gallons of aviation fuel placed into an aircraft owned by a commercial airline while the aircraft is in Tallahassee, the state capital. To qualify the commercial airline must:

• Have a ticket counter presence in Tallahassee • Have aircraft refueled in Tallahassee in connection with a flight that embarks or disembarks passengers, and lands

in and takes off from Tallahassee.

Section 2: Description of Data and Sources From January 1, 2015 to December 31, 2015, there are about 4 to 6 commercial airlines and aircrafts with total gallons of 1,848,933 pumped at the Tallahassee Airport.

$0.069 * 1,848,933= $127,576

Section 3: Methodology (Include assumptions and attach details) We took the information that we received from the FBO and grew at the growth rate of passengers. We also excluded freight carriers from the gallon amount.

Section 4: Proposed Fiscal Impact

High Middle Low

Cash Recurring Cash Recurring Cash Recurring

2016-17 ($ 0.1M) ($ 0.1M)

2017-18 ($ 0.1M) ($ 0.1M)

2018-19 ($ 0.1M) ($ 0.1M)

2019-20 ($ 0.1M) ($ 0.1M)

2020-21 ($ 0.1M) ($ 0.1M)

List of affected Trust Funds: Aviation Fuel Tax Group

705

REVENUE ESTIMATING CONFERENCE Tax: Aviation Fuel Tax Issue: Capital City Refund Bill Number(s): Proposed Language Sponsor(s): N/A Month/Year Collection Impact Begins: July 1, 2016 Date of Analysis: 3/01/15 Section 5: Consensus Estimate (Adopted: 03/02/2016): The Conference adopted the proposed estimate.

GR Trust Local/Other Total

Cash Recurring Cash Recurring Cash Recurring Cash Recurring

2016-17 (Insignificant) (Insignificant) (0.1) (0.1) 0.0 0.0 (0.1) (0.1)





706

Aviation Fuel - Capital City Refund

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A B C D E F G

Year Number of Passengers Growth Rate Year Gallons

Capital City Aviation

Fuel Consumption

CY2006 509,445 FY 2014-15 1,848,933 $127,576.38

CY2007 486,000 -0.05 FY 2015-16 1,762,381 $121,604.30

CY2008 437,015 -0.10 FY 2016-17 1,679,881 $115,911.79

CY2009 371,092 -0.15 FY 2017-18 1,601,243 $110,485.76

CY2010 343,710 -0.07 FY 2018-19 1,526,286 $105,313.73

CY2011 305,686 -0.11 FY 2019-20 1,454,838 $100,383.81

CY2012 333,248 0.09 FY 2020-21 1,386,734 $95,684.67

CY2013 336,129 0.01

CY2014 339,078 0.01

Avg

-0.046811744

Total


2016-17 $ (0.1 M) $ (0.1 M)

2017-18 $ (0.1 M) $ (0.1 M)

2018-19 $ (0.1 M) $ (0.1 M)

2019-20 $ (0.1 M) $ (0.1 M)

2020-21 $ (0.1 M) $ (0.1 M)

High Middle Low

March 2, 2016 Impact Conference 707

REVENUE ESTIMATING CONFERENCE Tax: Sales Tax Issue: Plug in Electric Cars Bill Number(s): HB1123 Entire Bill Partial Bill: Sponsor(s): Rep. Dudley Month/Year Impact Begins: Effective July 1, 2016, one month lag for Impact. Date of Analysis: March 1, 2016 Section 1: Narrative a. Current Law: Currently no sales tax exemption for Plug-in electric vehicles or Plug-in Hybrid Vehicles. Such vehicles are

currently subject to the state 6% sales tax and any applicable local option.

b. Proposed Change: (19) EXEMPTIONS; PLUG-IN ELECTRIC VEHICLES.— (a) The sale of a new plug-in electric vehicle is exempt from the tax imposed by this chapter if the purchaser is a resident of the state as defined in s. 317.0003(4) and the vehicle is purchased from a licensed motor vehicle dealer in the state.

(b) The sales tax exemption applies to that portion of the sales price less than $40,000, not to exceed an exemption of $2,400 for each plug-in electric vehicle. The exemption provided under this paragraph does not apply to the lease or rental of a plug-in electric vehicle.

(c) The exemption provided in this subsection does not amend or repeal subsection (10), which provides a partial exemption for certain motor vehicles sold to a resident of another state.

(d) For the purpose of the exemption provided in this subsection, the term "plug-in electric vehicle" means a motor vehicle that is fully or partially powered by batteries that can be recharged from an external source of electricity; is made by a manufacturer primarily for use on public streets, roads, and highways; is acquired for use by the purchaser and not for resale; is rated at no more than 8,500 pounds unloaded gross vehicle weight; has a maximum speed of at least 55 miles per hour; and has a battery capacity of at least 4 kilowatt hours.

(e) This subsection expires June 30, 2021.

Section 2: Description of Data and Sources Hybridcars.com; Plugincars.com/cars; CPI data from National Economic Estimating Conference held December 2015; Florida New Hybrid Vehicle registration data from National Economic Estimating Conference held December 2015; http://www.forbes.com/sites/jimhenry/2014/05/31/the-average-trade-in-has-stopped-aging-so-fast-great-news-for-the-auto-industry/#79717e8c152d

Section 3: Methodology (Include Assumptions and Attach Details)

The base of the analysis is founded on the Hybrid Exemption Analysis performed in October, 2015. After updating the National Hybrid Vehicles Sold and the CPI data, the national ratios of Plug-in Hybrid Electric Vehicles (PHEV) and Plug-In Electric Vehicles (PEV) were found to be 8.2% and 13.8%. This percentage in comparison to previous years shows a drop in the PHEV and an increase in the PEV consistent with sources found which relate a boom in the number of Plug-In Electric Vehicles to the overall population of Plug-In Hybrid Electric Vehicles. Once these National ratios were found, they were applied to the Florida portion of the National Light Vehicles Sold to obtain a Florida portion of Plug-In Hybrid Electric and Plug-In Electric Vehicles. From there, a population of New PHEV & PEV was obtained and their associated prices to determine if the $40,000 cap would be reached by each individual vehicle. Vehicles that would exceed the $40,000 cap were placed in a “High End” group while the rest remained in a “Low End” group. Averages for each group were then found including the average Sales Taxes paid on average for both groups. Low Estimate Analysis:

The growth rate from the Hybrid analysis is used.

New vehicle prices are equal to the average price of the Low End group and grown by CPI.

The trade-in impact is used to adjust the purchase price of both New and Used Vehicles.

The Used Vehicle price is based on the new vehicle price adjusted for depreciation.

708

http://www.forbes.com/sites/jimhenry/2014/05/31/the-average-trade-in-has-stopped-aging-so-fast-great-news-for-the-auto-industry/#79717e8c152d

http://www.forbes.com/sites/jimhenry/2014/05/31/the-average-trade-in-has-stopped-aging-so-fast-great-news-for-the-auto-industry/#79717e8c152d

REVENUE ESTIMATING CONFERENCE Tax: Sales Tax Issue: Plug in Electric Cars Bill Number(s): HB1123 Middle Estimate Analysis:

The growth rate from the market research of the current state of the PHEV & PEV sales is used.

Average Prices in the High and Low End categories are grown by CPI.

The trade-in impact is used to adjust the purchase price of both New and Used Vehicles in High and Low End categories.

The Used Vehicle price of High and Low Categories is based on the new vehicle price adjusted for depreciation. High Estimate Analysis:

The growth rate from the market research of the current state of the PHEV & PEV sales is used targeting 3000 new PEV per year.

Average Prices in the High and Low End categories are grown by CPI.

The trade-in impact is used to adjust the purchase price of both New and Used Vehicles in High and Low End categories.

The Used Vehicle price of High and Low Categories is based on the new vehicle price adjusted for depreciation. Section 4: Proposed Fiscal Impact

High Middle Low


2016-17 $(32.3 M) $(35.2 M) $(22.8 M) $(24.9 M) $(7.9 M) $(8.7 M)

2017-18 $(42.8 M) $(42.8 M) $(30.6 M) $(30.6 M) $(9.0 M) $(9.0 M)

2018-19 $(50.3 M) $(50.3 M) $(36.4 M) $(36.4 M) $(9.2 M) $(9.2 M)

2019-20 $(57.9 M) $(57.9 M) $(42.3 M) $(42.3 M) $(9.3 M) $(9.3 M)

2020-21 $(65.4 M) $(65.4 M) $(48.5 M) $(48.5 M) $(9.5 M) $(9.5 M)

List of affected Trust Funds:

Sales and Use Tax Group Section 5: Consensus Estimate (Adopted: 03/02/2016): The Conference adopted the middle impact with an adjustment to the number of used cars from 5% to 0%.

GR Trust Revenue Sharing Local Half Cent


2016-17 (19.3) (21.1) (Insignificant) (Insignificant) (0.6) (0.7) (1.9) (2.0)





Local Option Total Local Total


2016-17 (0.6) (0.6) (3.1) (3.3) (22.4) (24.4)

2017-18 (0.8) (0.8) (4.2) (4.2) (30.0) (30.0)

2018-19 (0.9) (0.9) (4.9) (4.9) (35.7) (35.7)

2019-20 (1.1) (1.1) (5.7) (5.7) (41.6) (41.6)

2020-21 (1.2) (1.2) (6.5) (6.5) (47.5) (47.5)

709

Issue: Sales Tax - Plug- In Electric Vehicle Exemption

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A B C D E F G H I J

Low Estimate

Average Price of a Low End Plug-in type vehicle 31,627$ Growth Rate of Florida Hybrid Sales 5.8%

Highend PHEV proportion of Plug in Vehicles Sold 13.5%Low End PHEV Vehicles sold 86.5%

Highend PEV proportion of Plug in Vehicles Sold 54.7%Low end PEV Vehicles Sold 45.3%

National

Hybrids Sold Plug in Hybrids Sold

Plug electric

vehicles Sold PHEV/Hybrid PEV/Hybrid2011 269,178 1,529 1212 0.6% 0.5%2012 470,383 4,965 2704 1.1% 0.6%2013 547,097 48,957 47559 8.9% 8.7%2014 507,272 55,357 63325 10.9% 12.5%2015 524,647 42,959 72303 8.2% 13.8%

Proportion that is High 0% 100%

National

Hybrid

Vehicles sold

Propotion of Hybrid

Vehicles sold in Florida

Portion of

PHEV/Hybrid Sold

in Florida

Portion of

PEV/Hybrid Sold

in Florida High End Portion Low End Portion2016 518,217 30,057 2461 4,142 - 66032017 527,317 30,584 2504 4,215 - 67192018 532,650 30,894 2530 4,258 - 67872019 524,816 30,439 2492 4,195 - 66872020 516,500 29,957 2453 4,128 - 65812021 514,270 29,828 2442 4,111 - 6553

Assumed Percentage of New Vehicles sold become Used Car Population 0%Assumed percentage of Original Price is used car Value 85%"Trade-in" Vehicle Impact 35%

Low End Vehicles Used Low End

CPI CPI Adjusted Price

Trade-In

Adjustment Taxable Sales Price

Trade-In

Adjustment Taxable Sales2016 31,627$ 20,557$ 135,745,537.10$ 2016 26,883$ 17,474$ -$ 2017 2.439 32,398$ 21,059$ 141,498,012$ 2017 27,538$ 17,900$ -$ 2018 2.502 33,209$ 21,586$ 146,505,744$ 2018 28,227$ 18,348$ -$ 2019 2.560 34,059$ 22,138$ 148,046,457$ 2019 28,950$ 18,818$ -$ 2020 2.622 34,952$ 22,719$ 149,520,783$ 2020 29,709$ 19,311$ -$ 2021 2.687 35,891$ 23,329$ 152,876,099$ 2021 30,508$ 19,830$ -$

Sales Tax6% New Used Total Exemption Impact

2016 8,144,732$ -$ (8,144,732)$ 2017 8,489,881$ -$ (8,489,881)$ 2018 8,790,345$ -$ (8,790,345)$ 2019 8,882,787$ -$ (8,882,787)$ 2020 8,971,247$ -$ (8,971,247)$ 2021 9,172,566$ -$ (9,172,566)$

CYtoFY Cash

2016-17 (8,317,306)$ 2017-18 (8,640,113)$ 2018-19 (8,836,566)$ 2019-20 (8,927,017)$ 2020-21 (9,071,906)$

March 2, 2016710


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A B C D E F G H I J

Middle Estimate

Yr Growth Rates PHEV/Hybrid PEV/Hybrid2016 10.60% 8.2% 13.8%2017 13.00% 8.2% 13.8%2018 15.35% 8.2% 13.8%2019 18.14% 8.2% 13.8%2020 21.16% 8.2% 13.8%2021 24.26% 8.2% 13.8%

High End PHEV 13.5% High End PEV 54.7%Low End PHEV 86.5% Low End PEV 45.3%

National Hybrid Sales

Florida Hybrids

Sales PHEV PEV2016 535,423 56,755 4,647 7,822 2017 541,553 70,410 5,765 9,703 2018 547,687 84,065 6,883 11,585 2019 538,850 97,721 8,002 13,467 2020 526,445 111,376 9,120 15,349 2021 515,400 125,031 10,238 17,231

High End PHEV High End PEV Low End PHEV Low End PEV Total High Total Low2016 629 4,277 4018 3544 4906 75632017 780 5,306 4985 4397 6087 93822018 932 6,335 5952 5250 7267 112022019 1,083 7,364 6918 6103 8447 130212020 1,234 8,393 7885 6956 9628 148412021 1,386 9,423 8852 7808 10808 16660

Low End Average Sales Price 31,627$ Used Rate 0%High End Average Sales Price 72,764$ Used Price Adjustment 85%

Trade in Vehicle Impact on loss 35%State Sales Tax 6%

March 2, 2016711


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A B C D E F G H I J

Low End Vehicle CPI CPI Adjusted Price Trade In Adjustment Taxable Sales Exemption Impact Total Low End Exemption2016 31,627$ 20,557$ 155,466,043$ (9,327,963)$ (9,327,963)$ 2017 2.439 32,398$ 21,059$ 197,575,535$ (11,854,532)$ (11,854,532)$ 2018 2.502 33,209$ 21,586$ 241,796,295$ (14,507,778)$ (14,507,778)$ 2019 2.560 34,059$ 22,138$ 288,268,515$ (17,296,111)$ (17,296,111)$ 2020 2.622 34,952$ 22,719$ 337,165,131$ (20,229,908)$ (20,229,908)$ 2021 2.687 35,891$ 23,329$ 388,675,093$ (23,320,506)$ (23,320,506)$

Used Adjusted Price Trade In AdjustmentTaxable Sales Exemption Impact2016 26,883$ 17,474$ -$ -$ 2017 27,538$ 17,900$ -$ -$ 2018 28,227$ 18,348$ -$ -$ 2019 28,950$ 18,818$ -$ -$ 2020 29,709$ 19,311$ -$ -$ 2021 30,508$ 19,830$ -$ -$

High End Vehicles

CPI CPI Adjusted Price Trade-In Adjustment Taxable Sales

Sales Tax

Exemption cap

Exemption

Impact Total High End Exemption Impact2016 72,764$ 47,296$ 232,043,522$ 2,400$ (11,774,784)$ (11,774,784)$ 2017 2.439 74,538$ 48,450$ 294,894,771$ 2,400$ (14,607,821)$ (14,607,821)$ 2018 2.502 76,404$ 49,662$ 360,897,228$ 2,400$ (17,440,859)$ (17,440,859)$ 2019 2.560 78,360$ 50,934$ 430,260,140$ 2,400$ (20,273,897)$ (20,273,897)$ 2020 2.622 80,414$ 52,269$ 503,241,627$ 2,400$ (23,106,935)$ (23,106,935)$ 2021 2.687 82,575$ 53,674$ 580,123,709$ 2,400$ (25,939,973)$ (25,939,973)$

Used Adjusted Price Trade-In AdjustmentTaxable Sales

Sales Tax

Exemption Cap

Exemption

Impact2016 61,849$ 40,202$ -$ 2,400$ -$ 2017 63,358$ $ 41,182 -$ 2,400$ -$ 2018 64,943$ 42,213$ -$ 2,400$ -$ 2019 66,606$ 43,294$ -$ 2,400$ -$ 2020 68,352$ 44,429$ -$ 2,400$ -$ 2021 70,189$ 45,623$ -$ 2,400$ -$

Middle Estimate Exemption Impact Total CYtoFY2016 (21,102,746)$ 2017 (26,462,354)$ 2016-17 (23,782,550)$ 2018 (31,948,637)$ 2017-18 (29,205,495)$ 2019 (37,570,008)$ 2018-19 (34,759,322)$ 2020 (43,336,843)$ 2019-20 (40,453,425)$ 2021 (49,260,478)$ 2020-21 (46,298,660)$

March 2, 2016712


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A B C D E F G H I J

High Estimate

Florida Hybrid Sales Growth rateAverage Price of a Low End Plug-in type vehicle 31,627$ 10.60%Growth Rate of Florida Hybrid Sales 5.80% 13.00%

15.35%Highend PHEV proportion of Plug in Vehicles Sold 13.5% 18.14%Low End PHEV Vehicles sold 86.5% 21.16%

24.26%Highend PEV proportion of Plug in Vehicles Sold 54.7%Low end PEV Vehicles Sold 45.3%

National Hybrids Sold

Plug in Hybrids

Sold

Plug electric

vehicles Sold PHEV/Hybrid PEV/Hybrid2011 269,178 1,529 1212 0.6% 0.5%2012 470,383 4,965 2704 1.1% 0.6%2013 547,097 48,957 47559 8.9% 8.7%2014 507,272 55,357 63325 10.9% 12.5%2015 524,647 42,959 72303 8.2% 13.8%

Adjust to Proportion High And Low Purchases: 100% 0%

National Hybrid Sales

Hybrids Sold in

Florida PHEV PEV High End Low End Total2016 535,423 56,755 4,647 7,822 12,469 - 2017 541,553 70,410 5,765 9,703 15,469 - 2018 547,687 84,065 6,883 11,585 18,469 - 2019 538,850 97,721 8,002 13,467 21,469 - 2020 526,445 111,376 9,120 15,349 24,469 - 2021 515,400 125,031 10,238 17,231 27,469 -

Low End Average Sales Price 31,627$ Used Rate 0%High End Average Sales Price 72,764$ Used Price Adjustment 85%

Trade In impact 35%Sales Tax 6%

High End Vehicles

New CPI CPI Adjusted Price Net of Trade-in

Taxable Sales w/o

Exemption

Sales Tax

Exemption cap

Exemption

Impact2016 72,764$ 47,296 589,725,054$ 2,400$ (29,924,925)$ 2017 2.439 74,538$ 48,450 749,457,832$ 2,400$ (37,124,925)$ 2018 2.502 76,404$ 49,662 917,199,220$ 2,400$ (44,324,925)$ 2019 2.560 78,360$ 50,934 1,093,481,009$ 2,400$ (51,524,925)$ 2020 2.622 80,414$ 52,269 1,278,959,195$ 2,400$ (58,724,925)$ 2021 2.687 82,575$ 53,674 1,474,350,517$ 2,400$ (65,924,925)$

March 2, 2016713


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A B C D E F G H I J

Used Adjusted Used Price Taxable Sales Net of Trade-in

Taxable Sales w/o

Exemption

Sales Tax

Exemption Cap

Exemption

Impact

Total High End

Vehicle Sales

Tax2016 61,849$ -$ 40,202$ 501,266,296$ 2,400$ -$ (29,924,925)$ 2017 63,358$ -$ 41,182$ 637,039,157$ 2,400$ -$ (37,124,925)$ 2018 64,943$ -$ 42,213$ 779,619,337$ 2,400$ -$ (44,324,925)$ 2019 66,606$ -$ 43,294$ 929,458,858$ 2,400$ -$ (51,524,925)$ 2020 68,352$ -$ 44,429$ 1,087,115,316$ 2,400$ -$ (58,724,925)$ 2021 70,189$ -$ 45,623$ 1,253,197,939$ 2,400$ -$ (65,924,925)$

Low End Vehicles

CPI CPI Adjusted Price Taxable Sales Used PHEV/PEV Taxable Sales2016 31,627$ -$ 2016 26,883$ -$ 2017 2.439 32,398$ -$ 2017 27,538$ -$ 2018 2.502 33,209$ -$ 2018 28,227$ -$ 2019 2.560 34,059$ -$ 2019 28,950$ -$ 2020 2.622 34,952$ -$ 2020 29,709$ -$ 2021 2.687 35,891$ -$ 2021 30,508$ -$

6%

Combined Lowend

Taxable Sales Exemption Impact2016 -$ -$ 2017 -$ -$ 2018 -$ -$ 2019 -$ -$ 2020 -$ -$ 2021 -$ -$

Total Sales Tax Collected CYtoFY2016 (29,924,925)$ 2017 (37,124,925)$ 2016-17 (33,524,925)$ 2018 (44,324,925)$ 2017-18 (40,724,925)$ 2019 (51,524,925)$ 2018-19 (47,924,925)$ 2020 (58,724,925)$ 2019-20 (55,124,925)$ 2021 (65,924,925)$ 2020-21 (62,324,925)$


2016-17 $ (30.7 M) $ (33.5 M) $ (21.8 M) $ (23.8 M) $ (7.6 M) $ (8.3 M)2017-18 $ (40.7 M) $ (40.7 M) $ (29.2 M) $ (29.2 M) $ (8.6 M) $ (8.6 M)2018-19 $ (47.9 M) $ (47.9 M) $ (34.8 M) $ (34.8 M) $ (8.8 M) $ (8.8 M)2019-20 $ (55.1 M) $ (55.1 M) $ (40.5 M) $ (40.5 M) $ (8.9 M) $ (8.9 M)

2020-21 $ (62.3 M) $ (62.3 M) $ (46.3 M) $ (46.3 M) $ (9.1 M) $ (9.1 M)

High Middle Low

March 2, 2016714

REVENUE ESTIMATING CONFERENCE Tax: Insurance Premium Tax Issue: Workers Comp Policy Dividends Bill Number(s): Proposed Language Entire Bill Partial Bill: Sponsor(s): Month/Year Impact Begins: January 2017 Date of Analysis: 2/25/2016 Section 1: Narrative a. Current Law: 624.509 Premium tax; rate and computation.—

(1) In addition to the license taxes provided for in this chapter, each insurer shall also annually, and on or before March 1 in each year, except as to wet marine and transportation insurance taxed under s. 624.510, pay to the Department of Revenue a tax on insurance premiums, premiums for title insurance, or assessments, including membership fees and policy fees and gross deposits received from subscribers to reciprocal or interinsurance agreements, and on annuity premiums or considerations, received during the preceding calendar year, the amounts thereof to be determined as set forth in this section, to wit: (a) An amount equal to 1.75 percent of the gross amount of such receipts on account of life and health insurance policies covering persons resident in this state and on account of all other types of policies and contracts, except annuity policies or contracts taxable under paragraph (b) and bail bond policies or contracts taxable under paragraph (c), covering property, subjects, or risks located, resident, or to be performed in this state, omitting premiums on reinsurance accepted, and less return premiums or assessments, but without deductions: 1. For reinsurance ceded to other insurers; 2. For moneys paid upon surrender of policies or certificates for cash surrender value; 3. For discounts or refunds for direct or prompt payment of premiums or assessments; and 4. On account of dividends of any nature or amount paid and credited or allowed to holders of insurance policies; certificates; or surety, indemnity, reciprocal, or interinsurance contracts or agreements;

b. Proposed Change: (a) An amount equal to 1.75 percent of the gross amount of such receipts on account of life and health

insurance policies covering persons resident in this state and on account of all other types of policies and contracts, except annuity policies or contracts taxable under paragraph (b) and bail bond policies or contracts taxable under paragraph (c), and workers compensation insurance policies taxable under paragraph (d), covering property, subjects, or risks located, resident, or to be performed in this state, omitting premiums on reinsurance accepted, and less return premiums or assessments, but without deductions:

(d) An amount equal to 1.75 percent of the direct written premiums on workers compensation insurance policies covering property, subjects, or risks located, resident, or to be performed in this state, omitting premiums on reinsurance accepted, and less dividends paid and credited or allowed to holders of insurance policies, certificates, or agreements, and less return premiums or assessments.

Section 2: Description of Data and Sources

CY 2013,2014 Office of Insurance Regulation (OIR) – Financial Annual Statement CY 2014 Premium Tax Returns

Section 3: Methodology (Include Assumptions and Attach Details)

Workers compensation direct written premiums as well as dividends paid and credited to policy holders from the OIR 2013 and 2014 annual financial statement are used. The direct written premium volume is grown at the 3 year average workers’ compensation growth rate. Dividends are estimated as a percentage of direct written premiums, using a two year average and then the tax rate of 1.75% is applied. The low estimate assumes those insurers at the 65% cit/salary credit cap max would be impacted disproportionately due to reduced taxable premiums (example provided at bottom of spreadsheet). The high estimate assumes those estimated dividend amounts would no longer be taxable. The middle estimate averages the high and low, assuming some mix of insurers would be impacted by the 65% cit/salary credit cap.

X

715

http://www.flsenate.gov/Laws/Statutes/2015/624.510

REVENUE ESTIMATING CONFERENCE Tax: Insurance Premium Tax Issue: Workers Comp Policy Dividends Bill Number(s): Proposed Language


High Middle Low


2016-17 ($1.6m) ($1.2m) ($0.9m)

2017-18 ($1.7m) ($1.4m) ($1.0m)

2018-19 ($2.0m) ($1.5m) ($1.1m)

2019-20 ($2.2m) ($1.7m) ($1.3m)

2020-21 ($2.5m) ($2.0m) ($1.4m)

List of affected Trust Funds: Insurance Premium Tax Grouping Section 5: Consensus Estimate (Adopted: 03/02/2016): The Conference adopted the low estimate. The first year cash impact is zero, the rest of the forecast cash impact is equal to the recurring impact.



2016-17 0.0 (0.9) 0.0 0.0 0.0 0.0 0.0 (0.9)

2017-18 (1.0) (1.0) 0.0 0.0 0.0 0.0 (1.0) (1.0)

2018-19 (1.1) (1.1) 0.0 0.0 0.0 0.0 (1.1) (1.1)

2019-20 (1.3) (1.3) 0.0 0.0 0.0 0.0 (1.3) (1.3)

2020-21 (1.4) (1.4) 0.0 0.0 0.0 0.0 (1.4) (1.4)

716

Proposed Language - IPT - Workers Comp Policy Dividends

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2

3

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18

19

20

21

22

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30

31

32

33

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46

A B C D E

Direct written premiums Dividends Paid and Credited % of premium

2013 $2,296,680,613 $60,116,748 2.62%

2014 $2,536,894,470 $65,243,319 2.57%

Tax rate applied to dividends $1,141,758 1.75%

Workers' compensation (WC) direct written premiums

2011 $1,780,556,888

2012 $2,014,460,083 13.1%

2013 $2,296,680,613 14.0%

2014 $2,536,894,470 10.5%

3 year average 12.5%

Direct written premiums Dividends Tax on Dividends3 year average WC

premium growth

2014 $2,536,894,470 $65,243,319 $1,141,758

2015 $2,854,897,829 $74,075,011 $1,296,313 12.5%

2016 $3,212,763,365 $83,360,420 $1,458,807 12.5%

2017 $3,615,487,860 $93,809,768 $1,641,671 12.5%

2018 $4,068,694,447 $105,568,957 $1,847,457 12.5%

2019 $4,578,711,129 $118,802,177 $2,079,038 12.5%

2020 $5,152,659,134 $133,694,200 $2,339,648 12.5%

2021 $5,798,552,345 $150,452,960 $2,632,927 12.5%

100% 79% 57%

FY Conversion HIGH MIDDLE LOW

2016-17 $1,550,239 $1,218,826 $887,412

2017-18 $1,744,564 $1,371,607 $998,651

2018-19 $1,963,247 $1,543,540 $1,123,833

2019-20 $2,209,343 $1,737,025 $1,264,707

2020-21 $2,486,288 $1,954,764 $1,423,240

Assumptions:

Low assumes those insurers at the 65% cit/salary cap max would be impacted

disproportionately due to reduced taxable premiums

Hypothetical example of an insurer at the 65% CIT/Salary cap

Tax Due CIT/Salary Credits Limitation

Current Law 1350 878 65%

Proposed Change 1000 650 65%

350 228

Change in tax due 350

Change in CIT/Salary credit 228

123 35%

717

REVENUE ESTIMATING CONFERENCE Tax: Sales And Use Tax Issue: Proposed Language- Business Shared Space Bill Number(s): Proposed Language Entire Bill Partial Bill: Sponsor(s): N/A Month/Year Impact Begins: July 1, 2016 with a one month lag to collections Date of Analysis: March 2, 2016 Section 1: Narrative Current Law: a. Section 212.08 (7) (kkk) F.S., Provides an exemption for certain manufacturing businesses from sales and use tax on purchases

of manufacturing machinery and equipment when the equipment is used at facilities whose primary business activity falls into the manufacturing NAICS codes 31, 32, or 33. The exemption covers parts and accessories when the parts and accessories are purchased prior to the date the machinery and equipment are placed in service. The exemption also covers cement mixing drums and the labor to install the mixing drums. The exemption states that if the purchaser provides the seller with a certificate certifying the purchaser’s eligibility for this exemption, then the seller is relieved of the responsibility of collecting the tax on the sale of the equipment. The current exemption expires on April 30, 2017.

b. Proposed Change: The proposed language modifies the definition of an “Eligible Manufacturing Business” in Section 212.08 (7) (kkk) 2 a F.S. to include: “The term also includes any business whose primary business activity at the location where the industrial machinery and equipment is located is to provide common space, support personnel and industrial machinery and equipment to a business or businesses whose primary business activity at the location where the industrial machinery and equipment is located is within the industries classified under NAICS codes 31, 32, and 33.”

Section 2: Description of Data and Sources Industry Research

Section 3: Methodology (Include Assumptions and Attach Details) Using industry research we were able to determine a reasonable expense amount for initial purchases made by a representative business incubator. All estimates assume that incumbent incubators spend an additional 25% of the acquisition cost of their current qualified equipment as an expansion of the qualified business. It is assumed that in the high estimate two new business incubators enter in 2018-19 and 2020-21. The Middle estimate assumes 1 new business incubator in 2018-19 and 2020-21. The low estimate assumes no new entrants. The first year cash impact is equal to eleven months of the recurring.


High Middle Low


2016-17 (Insig.) (Insig.) (Insig.) (Insig.) (Insig.) (Insig.)


2018-19 $(0.1 M) $(0.1 M) $(0.1 M) $(0.1 M) (Insig.) (Insig.)

2019-20 $(0.1 M) $(0.1 M) (Insig.) (Insig.) (Insig.) (Insig.)

2020-21 $(0.2 M) $(0.2 M) $(0.1 M) $(0.1 M) (Insig.) (Insig.)

List of affected Trust Funds: Sales and Use Tax Group Section 5: Consensus Estimate (Adopted: 03/02/2016): The Conference adopted a modified high estimate that added a business per year.



2016-17 (Insig.) (Insig.) (Insig.) (Insig.) (Insig.) (Insig.) (Insig.) (Insig.)

2017-18 (0.1) (0.1) (Insig.) (Insig.) (Insig.) (Insig.) (Insig.) (Insig.)




x

718

REVENUE ESTIMATING CONFERENCE Tax: Sales And Use Tax Issue: Proposed Language- Business Shared Space Bill Number(s): Proposed Language

Local Option Total Local Total



2017-18 (Insig.) (Insig.) (Insig.) (Insig.) (0.1) (0.1)




719

Proposed Language

Business Incubators

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A B C D E F G

Representative Business Incubator Spending on Qualifying Machinery and Equipment

$829,000

Total Firms Per Year

Year High Middle Low

2016-17 1 1 1

2017-18 2 1 1

2018-19 3 2 1

2019-20 4 2 1

2020-21 5 3 1

Growth Spending per year

High Middle Low

25% 25% 25%

New Installed base per year


2016-17

2017-18 829,000$ -$ -$

2018-19 829,000$ 829,000$ -$

2019-20 829,000$ -$ -$

2020-21 829,000$ 829,000$ -$

Expansion Spending Per year


2016-17 207,250$ 207,250$ 207,250$

2017-18 466,313$ 259,063$ 259,063$

2018-19 790,141$ 531,078$ 323,828$

2019-20 1,194,926$ 663,848$ 404,785$

2020-21 1,700,907$ 1,037,060$ 505,981$

Total Spending Per year


2016-17 207,250$ 207,250$ 207,250$

2017-18 1,295,313$ 259,063$ 259,063$

2018-19 1,619,141$ 1,360,078$ 323,828$

2019-20 2,023,926$ 663,848$ 404,785$

2020-21 2,529,907$ 1,866,060$ 505,981$

High Middle Low

Year Cash Recurring Cash Recurring Cash Recurring

2016-17 (0.0 M)$ $ (0.0 M) (0.0 M)$ $ (0.0 M) (0.0 M)$ $ (0.0 M)

2017-18 (0.1 M)$ $ (0.1 M) (0.0 M)$ $ (0.0 M) (0.0 M)$ $ (0.0 M)

2018-19 (0.1 M)$ $ (0.1 M) (0.1 M)$ $ (0.1 M) (0.0 M)$ $ (0.0 M)

2019-20 (0.1 M)$ $ (0.1 M) (0.0 M)$ $ (0.0 M) (0.0 M)$ $ (0.0 M)

2020-21 (0.2 M)$ $ (0.2 M) (0.1 M)$ $ (0.1 M) (0.0 M)$ $ (0.0 M)

03/02/2016720

Documents

REVENUE ESTIMATING CONFERENCE Tax …edr.state.fl.us/Content/conferences/revenueimpact/archives/2016/...(a) The sale of a new plug-in electric vehicle is exempt from the tax imposed