ASSEMBLY, No. 2596

STATE OF NEW JERSEY

INTRODUCED DECEMBER 16, 1996

By Assemblyman GREGG, Assemblywoman J. SMITH, Assemblymen Garrett, Blee, Assemblywoman Wright, Assemblyman Augustine, Assemblywoman Murphy and Assemblyman Moran

An Act exempting boat and marine product sales from certain retail sales tax exemptions, amending and supplementing P.L.1983, c.303 and amending P.L.1993, c.373.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. Section 20 of P.L.1983, c.303 (C.52:27H-79) is amended to read as follows:

    20. Retail sales of tangible personal property [(except motor vehicles)], with the exception of motor vehicles and boats and marine products as defined pursuant to the "New Jersey Boat Industry Loan Guarantee Fund Act," P.L.1993, c.358 (C.34:1B-7.28 et seq.), and sales of services [(except telecommunications)], with the exception of telecommunications services, to a qualified business for the exclusive use or consumption of such business within an enterprise zone are exempt from the taxes imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).

(cf: P.L.1990, c.40, s.9)

    2. Section 21 of P.L.1983, c.303 (C.52:27H-80) is amended to read as follows:

    21. Receipts of retail sales, except retail sales of boats and marine products as defined pursuant to the "New Jersey Boat Industry Loan Guarantee Fund Act," P.L.1993, c.358 (C.34:1B-7.28 et seq.), motor vehicles, [of] alcoholic beverages as defined in the "Alcoholic Beverage Tax Law," R.S.54:41-1 et seq., cigarettes as defined in the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-1 et seq.) and [of] manufacturing machinery, equipment or apparatus, made by a certified vendor from a place of business owned or leased and regularly operated by the vendor for the purpose of making retail sales, and located in a designated enterprise zone established pursuant to the "New Jersey Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et al.), are exempt to the extent of 50% of the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).

    Any vendor, which is a qualified business having a place of business located in a designated enterprise zone, may apply to the Director of the Division of Taxation in the Department of the Treasury for certification pursuant to this section. The director shall certify a vendor if he shall find that the vendor owns or leases and regularly operates a place of business located in the designated enterprise zone for the purpose of making retail sales, that items are regularly exhibited and offered for retail sale at that location, and that the place of business is not utilized primarily for the purpose of catalogue or mail order sales. The certification under this section shall remain in effect during the time the business retains its status as a qualified business meeting the eligibility criteria of section 27 of P.L.1983, c.303 (C.52:27H-86). However, the director may at any time revoke a certification granted pursuant to this section if he shall determine that the vendor no longer complies with the provisions of this section.    Notwithstanding the provisions of this act to the contrary, except as may otherwise be provided by section 7 of P.L.1983, c.303 (C.52:27H-66), the authority may, in its discretion, determine whether or not the provisions of this section shall apply to any enterprise zone designated after the effective date of P.L.1985, c.142 (C.52:27H-66 et al.); provided, however, that the authority may make such a determination only where the authority finds that the award of an exemption of 50 percent of the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.) will not have any adverse economic impact upon any other urban enterprise zone.

    Notwithstanding any other provisions of law to the contrary, except as provided in subsection b. of section 6 of P.L.1996, c.124 (C.13:1E-116.6) after first depositing 10 percent of the gross amount of all revenues received from the taxation of retail sales made by certified vendors from business locations in designated enterprise zones to which this exemption shall apply into the account created in the name of the authority in the enterprise zone assistance fund pursuant to section 29 of P.L.1983, c.303 (C.52:27H-88), the remaining 90 percent shall be deposited immediately upon collection by the Department of the Treasury, as follows:

    a. In the first five year period during which the State shall have collected reduced rate revenues within an enterprise zone, all such revenues shall be deposited in the enterprise zone assistance fund created pursuant to section 29 of P.L.1983, c.303 (C.52:27H-88);

    b. In the second five year period during which the State shall have collected reduced rate revenues within an enterprise zone, 66 2/3% of all those revenues shall be deposited in the enterprise zone assistance fund, and 33 1/3% shall be deposited in the General Fund;

    c. In the third five year period during which the State shall have collected reduced rate revenues within an enterprise zone, 33 1/3% of all those revenues shall be deposited in the enterprise zone assistance fund, and 66 2/3% shall be deposited in the General Fund;

    d. In the final five year period during which the State shall have collected reduced rate revenues within an enterprise zone, but not to exceed the life of the enterprise zone, all those revenues shall be deposited in the General Fund.

    Commencing on the effective date of P.L.1993, c.144, all revenues in any enterprise zone to which the provisions of this section have been extended prior to the enactment of P.L.1993, c.144 shall be deposited into the enterprise zone assistance fund until there shall have been deposited all revenues into that fund for a total of five full years, as set forth in subsection a. of this section. The State Treasurer then shall proceed to deposit funds into the enterprise zone assistance fund according to the schedule set forth in subsections b. through d. of this section, beginning at the point where the enterprise zone was located on that schedule on the effective date of P.L.1993, c.144. No enterprise zone shall receive the deposit benefit granted by any one subsection of this section for more than five cumulative years.

    The revenues required to be deposited in the enterprise zone assistance fund under this section shall be used for the purposes of that fund and for the uses prescribed in section 29 of P.L.1983, c.303 (C.52:27H-88), subject to annual appropriations being made for those purposes and uses.

(cf: P.L.1996, c.124, s.8)

    3. Section 1 of P.L.1993, c.373 (C.54:32B-8.45) is amended to read as follows:

    1. Receipts of retail sales, except retail sales of boats and marine products as defined pursuant to the "New Jersey Boat Industry Loan Guarantee Fund Act," P.L.1993, c.358 (C.34:1B-7.28 et seq.), motor vehicles, [of] alcoholic beverages as defined in the "Alcoholic Beverage Tax Law," R.S.54:41-1 et seq., and cigarettes as defined in the "Cigarette Tax Act," P.L.1948, c.65 (C.54:40A-1 et seq.), made by a vendor from a place of business regularly operated by the vendor for the purpose of making retail sales at which items are regularly exhibited and offered for retail sale and which is not utilized primarily for the purpose of catalogue or mail order sales, in which county is situated an entrance to an interstate bridge or tunnel connecting New Jersey with a state that does not impose a retail sales and use tax or imposes a retail sales and use tax at a rate at least five percentage points lower than the rate in this State, are exempt to the extent of 50% of the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.). The State Treasurer shall annually designate the county or counties in which this exemption shall apply. (cf: P.L.1993, c.373 s.1)

    4. (New section) As to sales pursuant to section 20 of P.L.1983, c.303 (C.52:27H-79), section 21 of P.L.1983, c.303 (C.52:27H-80), and section 1 of P.L.1993, c.373 (C.54:32B-8.45) of boats and marine products as defined pursuant to the "New Jersey Boat Industry Loan Guarantee Fund Act," P.L.1993, c.358 (C.34:1B-7.28 et seq.), the tax rate shall be the rate in effect prior to the effective date of P.L. , c. (now pending before the Legislature as this bill); provided that the sale is made pursuant to a written contract entered into and accompanied by a deposit or partial payment prior to the effective date of P.L. , c. (now pending before the Legislature as this bill), notwithstanding the delivery of the property after the effective date of P.L. , c. (now pending before the Legislature as this bill).

    5. This act shall take effect immediately.

STATEMENT

    This bill would exempt the retail sale of boats and marine products as defined pursuant to the "New Jersey Boat Industry Loan Guarantee Fund Act," P.L.1993, c.358 (C.34:1B-7.28 et seq.) from transactions which are partially exempt from taxation pursuant to the “New Jersey Enterprise Zones Act,” P.L.1983, c.303 (C.52:27H-60 et seq.) and under P.L.1993, c.373 (C.54:32B-8.45) which lowered the sales tax in Salem County for certain retail transactions.

    Under P.L.1993, c.358 (C.34:1B-7.28 et seq.), "boat" means a vessel or watercraft, other than a personal watercraft or sea plane on the water, used or capable of being used as a means of transportation on water, which may be temporarily or permanently equipped with machinery for propulsion. "Marine products" are defined as those parts and materials utilized in the design, construction and maintenance of boats, which shall include, but need not be limited to, parts and materials used in boat engines, generators, transmissions, exhaust systems and electrical, plumbing, heating and cooling systems, except that marine products shall not include any oil or oil-based products or materials.

    Both of the laws cited above exempt automobile sales from the retail transactions which are affected by the partial sales tax exemption in order not to create an unfair competitive advantage to retailers on items of sufficient expense to justify travel for cost-savings. It is the sponsor's belief that the original urban enterprise zone program legislation inadvertently overlooked boat sales in providing for the retail sales tax exemption and that it was never the intent of the Legislature to create a disadvantage for boat and marine product retailers situated outside, but proximate to, urban enterprise zones.