ORLANDO, Fla. -- The Community Bankers of Florida are preparing to lobby state and federal legislators to make sure bigout-of-state banks don't escape corporate taxes once the state's interstate banking law goes into effect in May.
The community bankers fear that millions of dollars in taxes would be lost when companies like NationsBank Corp. and First Union Corp. are no longer required to have separate corporate entities in Florida.
This won't be a battle unless someone comes to the table and says they don't want to pay their fair share of taxes," said Vernon, Smith, chief executive of Riverside National Bank of Fort Pierce the outgoing CBF president.
"At this point it's been raised as an issue," he added. "We want equal taxation."
The issue was among the most hotly discussed by the representatives of more than 60 banks who attended the trade group's 39th annual convention last week in Orlando. Fair lending issues and regulatory burdens also dominated conversation and seminars, but interstate banking loomed over much of the event.
Since taxes historically have been collected where the bank is incorporated, the trade group fears that tax revenue from branches of out-of-state banks will go to the home state of the owning institution.
Community bankers said this would be an unfair advantage for their larger competitors because they assume the larger banks would pay less taxes. It also means tax revenue will leave their communities. Big banks dismiss the argument, saying they do not anticipate any changes in their tax payments.
"When the tax base shifts, the money they (out-of-state banks) have generated and created then goes elsewhere, not to the community," said Sam Cook, executive director of the trade group. "This is the primary issue. It affects the community as a whole."
The association is in the beginning stages of pushing the issue before members of the Florida legislature, Ms. Cook said, and intends to have the matter studied and to compile numbers on precisely how much tax revenue could be lost by Florida communities.
"State legislatures will have to look for a solution with equity and fairness so that local banks aren't discriminated against," said John Shivers, Independent Bankers Association of America presiddent and a speaker at the convention. "They'll have to make sure that big banks pay their fair share.
First Union, an out-of-state bank with a large presence in Florida, does not expect a tax break, said Robert Propst, a vice president and the corporate tax manager of the Charlotte, N.C-based company. "Because we have a physical presence there we will still be paying taxes," he said. "That's what we're assuming."
Mr. Propst added that some states, such as Virginia and South Carolina, have much more "antiquated" bank taxation laws and will have to be looked into, but he does not see a problem with Florida's corporate tax structure.
Some laws in other states would result in taxing more than 100% of the bank's income if left in place, Mr. Propst said.
