This is Part III of a continuing Palmetto Bay educational series. Part
I provided the initial background, clarifying that Palmetto Bay runs on much
more than just the annual property tax/ Part I focused on one of the additional
sources of revenue: FPL's franchise fees.
Part II evaluated the cost of the tax and impact upon having to
compensation for the loss, should that occur.
Palmetto Bay has significant capacity to adjust the municipal property
tax millage rate to compensate. 2.2387! A cessation of collecting the FPL
franchise fee (tax) paid by electrical service consumers hits governments
hardest that are near or at their maximum millage allowable (the 10 mill cap).
So now, here in Part III, I am simply going to discuss who is better or
worse off if Palmetto Bay does not enter into a Franchise Fee agreement with
FPL. Note there are many ways to view the impacts to many different categories
of property owners/taxpayers. I offer a few examples that immediately came to
mind.
Note: You may agree or
disagree in all or part of my assessments.
Winners:
BIG, BIG winners: Tax exempt
properties: Any and all property owners who are exempt from payment of
property taxes such as schools, hospitals, Houses of Worship, Charity owned
properties. They may not d\pay property taxes directly, but they do pay
franchise fees through their electric bills which may be substantial in
comparison to average homeowners. These
tax exempt properties get closer to being truly “tax exempt” as they presently
do pay taxes to the local government(s) in the form of “FPL Franchise Fee.”
This is the one classification of property owners who do NOT realize a shifting
of tax burden from their electric bill to the property tax roll.
Homeowners: A franchise fee
is not deductible from Federal Taxes, but municipal property taxes are. So, by
moving the tax from their electric bill back to the homeowner's municipal property
tax bill, they gain the deduction while “lowering” the cost of their monthly
electric bill (not the cost of electricity, but losing a 3-6% “fee”).
Seniors: Those who are on
fixed income save the franchise fees off their electric bills while having greater
protections from rising property tax burdens through property tax exemptions.
Losers:
Owners of taxable properties,
commercial or residential, including Homeowners: A greater local tax burden
is shifted onto them as 501(c)3's that are exempt no longer pay their municipal
tax through the franchise fee, therefore the pool of tax payers shouldering the
tax burden is reduced – increasing the burden on those left to cover the
revenue/expense needs of the local government.
Homeowners: Who use the
Standard Deduction on their Federal Income Tax, not filing an itemized return -
they cannot deduct the increase in the property taxes, but then again, they did
not deduct prior taxes either and could not deduct the franchise fee.
Users of alternative energy: Property owners, residential or
commercial, who have reduced their electric bills due to investing in solar or
other means of increasing energy efficiency will lose the savings of a reduced
franchise fee cost formerly realized through a reduced electric bill due to the
shifting of the increased burden over to their property tax bill.
Investors in alternative energy: Loss of incentive of savings. 3 - 6%
is, after all, 3 – 6%. This may represent a ‘tipping point’ in deciding whether
to invest in alternative energy.
Unknown:
Commercial property owners:
The electric service bill (including the franchise fee) is deductible to the
extent allowed by law – as are the property taxes paid.
Renters: would they save
more in reduced electric bills over the increased cost of rents that may occur
if the local government increases the property tax millage rate, which is also
passed on to the renters?
Other interesting points (or
not):
Conservation: you can
control your electric useage through smart innovations or simply frugal living.
This provides some control over the 3-6% by electric services users. This is
lost should the tax be shifted to property tax bills.
DISCLAIMER: This information
is provided in order to debate an important policy issue – a tax collected by
FPL through electric service bills. No
blog post, including this series, should be construed as providing tax or legal
advice. You should consult your own licensed attorney or accountant on any
legal or tax issue.
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