Florida lawmakers may need to raise the state’s general sales tax rate to 12 percent, potentially the highest in the nation, if they eliminate property taxes and replace them with higher consumption taxes. This finding comes from a report by the nonpartisan Florida Policy Institute (FPI), which analyzed the essential role of property taxes in local budget operations.
The FPI warned that removing property taxes could hinder local governments’ ability to fund essential services such as police, fire departments, and schools. The report noted that approximately $43 billion would be needed to maintain public services currently funded by property tax revenue if these taxes were abolished. Even if all county governments and school districts collected local option surtaxes at their maximum rates, it would only generate an estimated $13.2 billion, covering about a third of the necessary revenue.
Florida’s per capita property tax revenue is $2,015, placing it in the middle compared to other states. New Jersey has the highest per-capita property revenue at $4,451.
For two consecutive years, legislation has been proposed directing a study on replacing property tax revenues through budget reductions and various consumption taxes authorized by the Legislature.
Sadaf Knight, CEO of FPI, stated: “Our tax code is already the most upside-down in the nation. Eliminating property taxes and enacting a sales tax hike in its place would only exacerbate this issue.” She emphasized that such changes could worsen inflation and disproportionately affect low-income Floridians.
Esteban Leonardo Santis, PhD, policy analyst at FPI and author of the report, commented: “Proposals to eliminate property taxes often look to replace lost revenue through consumption taxes or fail to identify new sources of revenue.” He added that these proposals rarely benefit those who need relief most while risking public education and services.
To address inequities in the property tax code, FPI recommended ensuring eligible homeowners benefit from homestead exemptions and Save Our Homes initiatives. They also suggested measures such as implementing a “circuit-breaker” property tax rebate, reenacting Florida’s intangible property tax on stocks and bonds, taxing luxury services like private flights, collecting a mansion tax on real estate sales over $1 million, and enacting a state-level version of the Earned Income Tax Credit called the Working Floridians Tax Rebate.
FPI is an independent organization focused on advancing policies that enhance economic mobility and quality of life for Floridians.
