An expiring sales tax exemption could have a devastating impact on the state economy, according to new analysis by Florida TaxWatch. Florida manufacturers are exempt from paying taxes on machinery and equipment purchases, but unless lawmakers take action this spring that exemption will disappear, threatening the state’s manufacturing sector.

“Florida’s manufacturing sector is vital to diversifying the state economy, and provides high wage jobs and a stable income stream,” said Dominic M. Calabro, President and CEO of Florida TaxWatch. “The manufacturing machinery and equipment sales tax exemption incentivizes the growth of the manufacturing industry and helps make Florida competitive with other states.”

Nearly all southern states provide incentives to manufacturers, but Florida is noticeably behind in manufacturing output. The Sunshine State’s per capita manufacturing expenditures are lowest among the 12 southern states, and total less than one-third of average expenditures.
TaxWatch notes extending the exemption could significantly improve Florida’s manufacturing industry in relation to other southern states and result in higher economic output. If the exemption expires, Florida manufacturers will pay higher sales tax rates than nearly every other southern state.

“The manufacturing sales tax exemption is working to boost the state’s manufacturing sector,” said Steve Petty, Chief Economist for Florida TaxWatch. “Allowing the exemption to expire would put Florida further behind in manufacturing and could hinder our state’s efforts to diversify the economy and ensure Floridians have access to high-skill, high-wage jobs.”

Since implementing the sales tax exemption on manufacturing equipment, average monthly taxable sales in Florida’s manufacturing industry jumped 11.2 percent to $756 million per month.

» Read the report, "Extending the Manufacturing Machinery & Equipment Sales Tax Exemption."

Florida TaxWatch is a statewide, non-profit, non-partisan research institute that over its 34-year history has become widely recognized as the watchdog of citizens' hard-earned tax dollars.  Its mission is to provide the citizens of Florida and public officials with high quality, independent research and education on government revenues, expenditures, taxation, public policies and programs and to increase the productivity and accountability of Florida state and local government. Its support comes from homeowners and retirees, small and large businesses, philanthropic foundations, and professional associations. On the web at www.FloridaTaxWatch.org.