County Mulls Salestax Breaks For Businesses In Underdeveloped Areas
Written by Shannon Pettypiece on March 18, 2004
By Shannon Pettypiece
Local officials are studying an economic development program in New Jersey that includes sales-tax breaks in certain areas and a redistribution of state sales tax to determine if a similar model would give communities here an economic jolt.
Miami-Dade County officials and members of the county’s economic development group, the Beacon Council, are to travel to New Jersey next week to get a closer look at the program.
"It will be a fact-finding type of trip," said Assistant County Manager Tony Crapp, in charge of the county’s economic development. "We will find out how it works and how it benefits companies and areas that are a part of it."
Under New Jersey law, businesses in underdeveloped areas collect and pay a lower sales-tax rate as a way to attract consumers. Also, sales taxes generated in underdeveloped areas stay there instead of going into the state’s coffers, said Bryan Finnie, director of the county’s economic and community development department, who worked on New Jersey’s program as director of community development before coming here.
By keeping sales-tax revenues in the underdeveloped areas, New Jersey officials found they could investment more in infrastructure such as roads, street lighting and security where it was needed most, attracting large-scale development, Mr. Finnie said.
He said that in Newark, a major shopping center was built on an old garbage dump as a result of sales-tax funds available under the program for improvements.
"If all a developer has to do is raise capital for the deal, it makes deals easier to do," Mr. Finnie said. "The difference between here and New Jersey is how New Jersey captures its sales tax that is the cash generator."
New York, Minnesota and Detroit have programs called tax-free zones in which companies in designated areas don’t pay or collect sales tax.
If the Florida contingent likes what it sees, Mr. Crapp said, officials will push the state Legislature to sponsor a study during this legislative session on how tax-free zones or changes to sales-tax distribution could be used in Florida and what impact they would have. He said the county has not spoken with any legislators about the issue.
"The next step is to begin work with our own Dade legislative delegation to see what appropriations committees in Tallahassee are going to be working on the program," Mr. Crapp said.
The investigation of tax-free zones is tied to the 2005 expiration of the state’s enterprise and empowerment zones, designated underdeveloped areas where businesses are eligible for economic incentives, Mr. Crapp said.
"What would have to happen this year is authorization of some type of study to evaluate the (enterprise and empowerment zone) program over its 20-year history and maybe from that study make some findings and recommendation," Mr. Crapp said.
The state gives several types of tax breaks for businesses in underdeveloped areas. Sales-tax breaks would have to be part of an overall system that channels sales-tax revenue to the areas in need and better coordinates other state economic programs, Mr. Finnie said.
The tax-free zones "would be one more tool in a toolbox," he said. "New Jersey doesn’t have many more tools in the toolbox than we have, but what it does have is a commitment to the management of those tools."
The New Jersey program may take some tweaking to work in Florida because Florida has no state income tax and is dependent on sales tax, Mr. Finnie said.
Miami-Dade County Commission Chairwoman Barbara Carey-Shuler was scheduled to make the trip but backed out for personal reasons. She has been pushing for more development in the county’s poorer areas and said last month that adopting a program similar to New Jersey’s is one of her top priorities before she steps down as chairwoman in November.
"I will continue to create room for those who need opportunities, and I look forward to working with Frank Nero and the Beacon Council and others to create more economic opportunities for this town," said Ms. Carey-Shuler.
Beacon Council spokeswoman Doris McPherson said the council would not discuss the subject until later this month.