Senator SANDRA B. CUNNINGHAM
District 31 (Hudson)
Senator BRIAN P. STACK
District 33 (Hudson)
Allows municipality with population over 200,000 to impose employer payroll tax.
CURRENT VERSION OF TEXT
An Act concerning the local employer payroll tax and amending P.L.1970, c.326 and repealing section 19 of P.L.1970, c.326.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 15 of P.L.1970, c.326 (C.40:48C-15) is amended to read as follows:
15. a. Any municipality may by ordinance impose and collect an employer payroll tax for general municipal purposes of the municipality at a rate of up to [1%] one percent of the employer's payroll.
b. A municipality may by ordinance adjust the rate of an employer payroll tax imposed and collected pursuant to subsection a. of this section, provided that the rate does not exceed one percent. Any reduction in [the] an employer payroll tax while the municipality is in receipt of [transitional] aid provided through the Transitional Aid to Localities program, or any other discretionary aid program for municipalities in fiscal distress, shall be subject to approval by the Department of Community Affairs.
c. An ordinance adopted pursuant to subsection a. of this section may provide that the employer payroll tax shall not apply to the remuneration paid by employers to employees who are residents of the municipality.
(cf: P.L.2017, c.35, s.1)
2. Section 19 of P.L.1970, c.326 (C.40:48C-19) is repealed.
3. This act shall take effect immediately.
This bill would allow a municipality having a population over 200,000 to impose and collect an employer payroll tax. Current law allows a municipality to impose and collect an employer payroll tax if it had the tax during the two-year period prior to July 1, 1995. Newark was the only eligible municipality to have done so, and is accordingly the only municipality currently authorized to have an employer payroll tax. This bill would allow all other municipalities with a population of at least 200,000, presently only Jersey City, to impose an employer payroll tax.
The bill would also allow a municipality that has adopted an employer payroll tax to create an exception for wages of employees who are residents of the municipality.
Current law does not explicitly provide that a municipality may change the rate of an employer payroll tax so long as the rate does not exceed one percent. This bill would explicitly allow a municipality to make that change.