ASSEMBLY APPROPRIATIONS COMMITTEE

 

STATEMENT TO

 

ASSEMBLY, No. 1702

 

STATE OF NEW JERSEY

 

DATED: OCTOBER 7, 1996`

 

      The Assembly Appropriations Committee reports favorably Assembly Bill No. 1702.

      Assembly Bill No. 1702 provides a sales tax exemption for imprinting services performed on production machinery.

      Currently, sales of machinery, apparatus and equipment used directly and primarily in the production of tangible personal property is exempt from the sales and use tax while sales of fabricating, processing, installation and maintenance services to that production machinery are taxable. This bill provides an exemption for one of those currently taxable services: imprinting services. Imprinting services for production machinery are, for example, the engraving and etching services to printing machinery used in the production of patterned textiles and wall and floor coverings.

      This bill is identical to Senate Bill No. 142.

 

FISCAL IMPACT:

      The Division of Taxation estimates the impact of the bill will be a decrease in sales tax revenue of $1.1 million in FY 1997 and $1.1 million in FY 1998. Analysis by the Office of Legislative Services, described in a fiscal note to the bill, cautions that while the initial State revenue loss attributable to the bill may be somewhat less than that predicted by the division, unlike the flat impact predicted by the division the revenue loss will grow in the years following enactment.