12B-7.0225: Computation of Phosphate Rock Tax Rate
PURPOSE AND EFFECT: The purpose of the proposed amendments to Rule 12B-7.0225, F.A.C., is to put the public on notice regarding the change in methodology for calculating the annual base rate adjustment to the phosphate rock tax rate for the year 2006 and the proposed new index to be used by the Department for calculating the tax rate adjustments for the year 2007 and thereafter.
Section 211.3103, F.S., requires an annual adjustment to the base price of $1.62 by the change in the producer price index for phosphate rock primary products. Section 211.3103(9)(e), F.S., required the Department to select a “comparable index,” if that index was discontinued. The original producer price index was discontinued. The Producer Price Index program changed its basis for industry classification from the 1987 Standard Industrial Classification (SIC) system to the North American Industry Classification System (NAICS). As a result, the Chemical and Fertilizer Mineral Mining Index, Commodity Code 147, was discontinued by the U.S. Department of Labor, Bureau of Labor Statistics, and it became necessary for the Department of Revenue to select a commodity index to replace that index. The Chemical Fertilizer Mineral Mining Index, Commodity Code 147, has since been renamed and renumbered as Other Nonmetallic Mineral Mining and Quarrying. As a consequence, the Bureau of Labor Statistics (BLS) has revised its numbering system as (BLS series: PCU 21239). Within this new series is a specific index for phosphate rock (BLS Series ID 212392).
When in effect, this rule will provide that the Department: (1) will calculate the 2006 phosphate tax rate using the change in the phosphate rock prices published by the U.S. Geological Survey; and (2) use NAICS Code 212392, Phosphate Rock, for purposes of accessing the Producer Price Index Industry Data from the BLS, beginning with the year 2007 and thereafter for purposes of calculating the annual base rate adjustment to the phosphate rock tax rate.
The Department’s current rule had selected a producer price index for chemical and fertilizer mineral mining comparable to the discontinued index and used it to calculate the annual phosphate rock base rate adjustment. As long as the three subcategories in that comparable index (Potash, Phosphate Rock, and Other Chemical Mining) changed more or less similarly, the use of that price index was entirely appropriate. However, data obtained from the U.S. Geological Survey indicates that the price for potash has almost doubled in the last three years; the price for phosphate rock has remained relatively stable, increasing by 1.5 percent over the same three-year period. As a result, the currently published tax rate increased from $1.67 for 2005 to $1.82 for 2006; an increase of almost 10%. Thus, the price index currently used by the Department is no longer a comparable index to be used in the calculation of the annual phosphate rock base rate adjustment.
Section 211.3103(9)(d), F.S., provides that if the price index for chemical and fertilizer mineral mining is substantially changed, the Department is required to make appropriate adjustments in the method used to compute the base rate adjustment that will produce results reasonably consistent with the producer price index for phosphate rock as if it had not been revised. Because the price index currently used by the Department does not produce results substantially consistent with the unrevised index, it is necessary for the Department to make the required adjustments in computation of the base rate adjustment.
SUBJECT AREA TO BE ADDRESSED: The subject area of the workshop is the proposed changes to Rule 12B-7.0225, F.A.C., regarding the Department’s change in methodology for calculating the annual base rate adjustment to the phosphate rock tax rate for the year 2006 and the index that will be used by the Department to calculate the base rate adjustments for the year 2007 and thereafter.
SPECIFIC AUTHORITY: 211.3103(9)(e) FS. 213.06(1) FS.
LAW IMPLEMENTED: 211.3103 FS.
A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
TIME AND DATE: May 9, 2006, 2:00 p.m.
PLACE: Room 118, Carlton Building, 501 S. Calhoun Street, Tallahassee, Florida.
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Larry Green at (850)922-4830. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Joe Parramore, Revenue Program Administrator I, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone (850)922-4709.
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
12B-7.0225 Computation of Phosphate Rock Tax Rate.
The U.S. Bureau of Labor Statistics Producer Price Index North American Industry Classification System (NAICS) National Code 212392, Phosphate Rock Commodity Code 147, Chemical and Fertilizer Mineral Mining, is hereby adopted by reference for the purpose of calculating the annual base rate adjustment to the phosphate rock tax rate, beginning with the year 2007 and annually thereafter. For the purpose of implementing the provisions s. 211.3103(9), F.S., the method used to compute the tax rate for the year 2006 will be the percentage change in phosphate rock prices as published by the U.S. Geological Survey, from 2004 to 2005, times the 2005 tax rate for phosphate rock as published by the Department.
Specific Authority 211.3103(6)(e) (9)(e) FS., 213.06(1) FS. Law Implemented 211.3103 FS. History–New