Retailers want rollback of Fla. unemployment tax

AP News
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Posted: Nov 19, 2009 5:19 PM

Some Florida businesses want to partly roll back an increase in their unemployment compensation tax after being shocked by its magnitude.

Florida Retail Federation President Rick McAllister said Thursday that his group will ask the state to keep the taxable wage for each employee at its current level of $7,000 instead of increasing it to $8,500 next year as required by a new law.

That would mean an increase in the current minimum tax of $8.40 per employee to $60 instead of the $100.30 that state officials announced Wednesday, McAllister said. The maximum tax would remain unchanged at $378 instead of increasing to $459.

With Florida's unemployment rate on the rise _ hitting 11 percent in September _ an increase in the tax had been expected. The only question was how big it would be. McAllister said the announced increase would cost Florida businesses about $2 billion.

"I think everyone's got sticker shock," said Tammy Perdue, general counsel for Associated Industries of Florida.

The federation will take up the issue with Gov. Charlie Crist's staff next week to see if it can be added to a special legislative session on commuter rail service Crist wants in December or January, McAllister said.

Associated Industries and the Florida Chamber of Commerce, two other major business groups, still are collecting feedback from their members and have not yet taken a position.

The chamber also is looking for ways to soften the blow and retaining the existing wage level is one of the options, said David Daniel, the organization's vice president of governmental affairs.

The business community had supported increasing the taxable wage level. It was a way to more quickly restore Florida's Unemployment Compensation Trust Fund that dropped to zero in August and repay federal loans.

"It was a responsible thing to do in 2009," Perdue said.

Florida now is borrowing $300 million a month from the federal government. If the state is delinquent in repaying those loans Florida businesses could be hit with an increase in their federal taxes.

"We've got to get the bucket full again," McAllister said, but "we had no idea at the time we did it how much money it would be."

Businesses ultimately would have to put just as much into the bucket but going back to the current taxable wage level would spread those payments over a longer time period, McAllister said.

State law automatically raises and lowers the tax depending on how much money is in the trust fund. That can mean a higher tax rate in bad times when the demand for benefits is greater _ like now _ and a lower one in good times.