LEGISLATIVE FISCAL ESTIMATE TO

ASSEMBLY, No. 2942

STATE OF NEW JERSEY

DATED: NOVEMBER 25, 1997

      Assembly Bill No. 2942 of 1997 would replace the word "exclusively" with the word "primarily" in the section of the Sales Tax Act granting an exemption to farmers in the purchase of tangible personal property that is to be used in the production of agricultural and horticultural commodities.

      The Office of Legislative Services (OLS) observes the proposed change to the agricultural exemption in the sales tax would bring the section into conformity with other sales tax exemptions concerning business machinery and equipment purchases used in manufacturing, energy production and the provision of telephony. The OLS notes there are no data available to estimate the precise cost to the State of the broadened exemption. The data that are available suggest the change would have a negligible impact on sales tax revenue. Based on a number of assumptions concerning farm equipment purchases used over 50 percent but less than 100 percent of the time in agricultural production, the annual sales tax loss at any given time might range between $300,000 and $600,000.

      This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

This fiscal estimate has been prepared pursuant to P.L.1980, c.67.