ASSEMBLY APPROPRIATIONS COMMITTEE

STATEMENT TO

ASSEMBLY, No. 1485

STATE OF NEW JERSEY

DATED: MARCH 4, 1996

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 1485.

      Assembly No. 1485 provides that a hotel in a municipality with tourism promotion fees must separately state the tourism promotion fees to guests and that such fees are not includible in the taxable room rent for New Jersey sales and use tax and Atlantic City luxury tax purposes. The only such municipality is Atlantic City. The bill is retroactive to March 1, 1992, the first day of the first full month in which hotel rentals were subject to the tourism promotion fees, and applies to all taxes that are uncollected since that date.

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 1485.

FISCAL IMPACT:

      The tourism promotion fees on each occupied room in an Atlantic City hotel, $2 per day for casino hotels and $1 per day for others, are imposed on the hotel owner and may be passed on to the customer. If the fees are passed on, the increase in hotel room rate currently becomes part of the taxable receipt on which New Jersey sales tax and Atlantic City luxury tax are imposed. The bill, which allows the fees to be excluded from taxable room rent, prevents tax "pyramiding," which is the imposition of the combined sales taxes on the fee. Imposition of the sales taxes on the tourism promotion fees would be expected to generate roughly $200,000 in New Jersey sales taxes and $600,000 in Atlantic City luxury taxes annually.

      However, no such revenues have been included in any revenue estimates or in State budgets or appropriations acts. The annual appropriations act for State fiscal year 1996 contains language explicitly forbidding the enforcement of New Jersey sales tax and Atlantic City luxury tax on the tourism promotion fees, and Department of Treasury information indicates that the sales taxes have never been enforced on the tourism promotion fees. Therefore the bill, although retroactive, would not require that any refund be made, and enactment would have no expected effect on estimates of closing surplus, revenue or expenditure for State fiscal years 1996 or 1997.