Disney loses special tax status in Florida

Walt Disney Co. lost its special tax status in Florida on Friday after Governor Ron DeSantis signed into law a bill scrapping the company's self-governing status in the area around its Orlando theme park complex.

Florida's Republican-dominated House of Representatives passed the bill on Thursday in a 68-38 vote, following a previous 23-16 vote in the state's senate.

Before urging Florida's legislature to back the new measure, DeSantis had criticized Disney for its opposition to another bill banning discussions on sexual orientation and gender identity for students under age 9. DeSantis is a member of the Republican Party.

The bill has been labeled the "Don't Say Gay" law by critics. DeSantis signed it into law in late March.

Why is Disney's special status being revoked?

Disney initially avoided taking a stand on the legislation, but later halted political donations in Florida following pressure from some of the company's employees and LGBTQ rights groups.

In the 2020 election cycle, Disney donated $4.8 million (€4.4 million) in total to political campaigns. This included campaign funds for Florida legislative members, some of who sponsored the legislation removing Disney's special status.

The company donated more than $900,000 to Florida's branch of the Republican party, $550,000 to the Republican senatorial campaign committee and $50,000 to DeSantis. Disney also donated $300,000 to Florida Democrats.

CEO Bob Chapek openly criticized the law before the company halted its donations, explaining his change of stance in a letter to Disney employees.

"Speaking to you, reading your messages, and meeting with you have helped me better understand how painful our silence was. It is clear that this is not just an issue about a bill in Florida, but instead yet another challenge to basic human rights," Chapek said, apologizing for the fact that Disney had not sooner adopted any position on the issue.

"If Disney wants to pick a fight, they chose the wrong guy," DeSantis recently wrote in a fundraising email.

"Disney is a guest in Florida. Today we remind them," Republican lawmaker Randy Fine tweeted.

"Disney doesn't say a word about the dictatorship in China because it would cost them billions of dollars," Republican Senator Marco Rubio said in a tweet. "But they have no problem using their corporate power to lie about laws passed by democratically elected legislators in Florida."

What was the special status conferred to Disney?

The southeastern US state of Florida declared a special area, the Reedy Creek Improvement District, in 1967 to facilitate the construction of the Disney World theme park near the city of Orlando. The city of Orlando grew rapidly on the back of the tourism brought to the area.

The Disney district covers 100 square kilometers and includes the cities of Bay Lake and Lake Buena Vista as well as land in Orange and Osceola counties in central Florida. 

Disney runs the district and is responsible for collecting taxes and guaranteeing municipal services such as fire-fighting, energy, garbage collection, water treatment and road maintenance. In exchange, the company has been exempted from paying taxes in the territory.

Under Florida law, if the district is dissolved its assets and debts could be transferred to local governments that surround the area.

"Removing the district could transfer $2 billion (€1.85 billion) debt from Disney to taxpayers," Democratic Senator Linda Stewart argued.

sdi/msh (AFP, Reuters)