Comments to the Honorable Ana Maria Rodriguez, Chair, and Members of the Senate Committee on Finance and Tax Regarding SB 982 – Tax Refund Program for Qualified Target Industry Businesses

My name is Dominic M. Calabro, and I am President and CEO of Florida TaxWatch, an independent, nonpartisan, nonprofit, taxpayer research institute and government watchdog which, for over 40 years, has worked hard to improve the effectiveness, efficiency, and accountability of Florida government and promote a fair and equitable system of taxation.

Businesses weigh many factors when deciding where to set up, relocate, or expand their shop. While Florida has a number of qualities that make the state attractive to businesses, a well-designed economic incentive can tip the scale in Florida’s favor. The Qualified Target Industry Tax Refund Program (QTI) is such an incentive.

The Qualified Target Industry Tax Refund Program is a performance-based incentive program, that incentivizes the creation of high-quality, high-wage jobs – the higher the wage, the larger the refund – in sought-after targeted industries and offers a bonus for new jobs in rural areas of the state, incentivizing businesses to locate in economically disadvantaged counties.

Each QTI contract outlines specific milestones that must be achieved and businesses participating in the program are only provided refunds once jobs are created, taxes are paid by the business, and performance is verified. The program also requires local support, with a city or county government providing 20 percent of the refund, though this match can be waived for rural counties. 

For 25 years, QTI served as the flagship of the state’s economic development efforts. It is worth noting that Florida evaluates its economic development incentive programs on a recurring three-year schedule, and for its three evaluations QTI showed a very positive return on investment (ROI) ranging from 4.3:1 to 6.4:1. The 6.4:1 ROI is the highest of any program since the evaluations began in 2014.

The state has proven success with the program. Despite this, QTI was sunset on June 30, 2020. Last summer, Florida TaxWatch reviewed the program and recommended reauthorizing the QTI (see the COVID-19 Taxpayer Task Force Report). 

QTI is a proven incentive program that can play an important role in the state’s growth, and it can have an even greater impact during our recovery from the pandemic. We look forward to working with you and your colleagues on this issue and are ready to discuss ways to strengthen Florida’s economy.