Sponsored by:
Assemblyman VINCENT J. POLISTINA
District 2 (Atlantic)
Assemblywoman CAROLINE CASAGRANDE
District 12 (Mercer and Monmouth)
Co-Sponsored by:
Assemblymen Bramnick, Amodeo, Thompson, Assemblywoman Handlin, Assemblyman Webber, Assemblywoman Karrow, Assemblyman Rudder, Assemblywoman Addiego, Assemblymen Dancer, Malone, Assemblywoman Vandervalk, Assemblymen Rooney, Rumpf, Wolfe, Assemblywoman McHose, Assemblymen DeCroce, Rible, Assemblywomen Angelini, Coyle, Assemblymen Carroll, Merkt, O'Scanlon, Holzapfel, Rumana, Doherty, Chiusano, Van Pelt, Munoz, Russo and Biondi
SYNOPSIS
Designated the Shop Here, Save Money, Secure Jobs Act of 2008; establishes sales and use tax rate reduction period from November 28, 2008 through January 4, 2009, sets reduction period tax rate at 3.5%.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing a period of reduced sales and use tax imposition, designated as the Shop Here, Save Money, Secure Jobs Act of 2008, supplementing P.L.1966, c.30 (C.54:32B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Notwithstanding the provisions of sections 3, 4 and 6 of P.L.1966, c.30 (C.54:32B-3, 54:32B-4, and 54:32B-6) to the contrary, the sales tax and the use tax which shall be paid pursuant to the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-1 et seq.) are imposed at the rate of 3.5% on sales made during the tax reduction period, admissions charges paid during the tax reduction period, rents for occupancies during the tax reduction period, and uses beginning during the tax reduction period.
b. As used in this section,
"Tax reduction period" means the period after November 27, 2008 but before January 5, 2009.
c. Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the director may adopt immediately upon filing with the Office of Administrative Law such regulations as the director deems necessary to implement the provisions of this section, which shall be effective for a period not to exceed 180 days following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and may thereafter be amended, adopted or readopted by the director in accordance with P.L.1968, c.410.
2. This act shall take effect immediately.
STATEMENT
This bill, designated the Shop Here, Save Money, Secure Jobs Act of 2008, provides an emergency shot in the arm for New Jersey’s economy – one that will increase the purchasing power of consumers, lure shoppers from New York and Pennsylvania, save businesses and save jobs. Specifically, the bill reduces the State sales tax by half, starting on the day after Thanksgiving Day 2008 (“Black Friday”) and lasting through Sunday, January 4, 2009. In most of the State, this will mean a sales tax reduction from 7% to 3.5%. In Urban Enterprise Zones and Salem County, which have a 3.5% sales tax rate on some sales, the rate on those sales would be reduced to 1.75%.
The current economic turmoil has already created a drop in retail sales and has led the Office of Legislative Services and others to project that consumers will spend less this holiday season, which will further erode New Jersey’s economic well-being. New Jersey consumers need a break and the State’s businesses need a boost. Reducing the sales tax will make this shopping season more affordable for consumers while increasing sales for businesses. Because of the regressive nature of the sales tax, this reduction will particularly help lower income families.
Studies have shown that the best short-term stimulus puts money in the pockets of families that are most vulnerable in a weakening economy. Those families with the least disposable income will be the first to cut back. Allowing them to keep more of their money while shopping or dining will help them during the downturn while increasing aggregate economic activity. Higher household spending encourages firms to hire more workers, which further boosts household income and spending.
By making New Jersey’s sales tax rate more competitive with those of surrounding states, this temporary sales tax reduction will retain consumer spending in New Jersey that would otherwise go to Pennsylvania or Delaware, and in addition will draw out-of-State shoppers into New Jersey stores and restaurants. This bill will create a holiday season competitive advantage over Pennsylvania, which has a 6% statewide rate and a 7% rate in Philadelphia; nearly eliminate Salem County’s disadvantage with Delaware, which has no sales tax, by reducing Salem County’s rate to 1.75%; and greatly increase New Jersey’s existing advantage over New York City, which has an 8 3/8% rate.
In a prior statutory enactment, the Legislature has specifically recognized that a substantially lower sales tax creates “a significant advantage in competition for customers” against adjacent geographic areas. This bill operates on the very same principle.
While much of the focus by policymakers thus far has been on how to bail out the big Wall Street investors, this bill will extend a hand to help struggling families and small businesses. This approach is not intended as a long-term fix for the State’s economy; separate proposals have been made in that regard. This bill is designed to provide much needed short-term benefits for consumers and businesses alike during the crucial holiday retail season.
When the choice is to either protect bloated State government spending or provide some relief to struggling families when they most need it, government should feel the pinch. In this case, it would be a small pinch equal to about 1.5% of the State’s current budget, but the cost of failing to enact this proposal could be much more substantial for families, workers, small businesses, and the State’s economic health.