SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

SENATE, No. 1909

STATE OF NEW JERSEY

DATED: DECEMBER 11, 1997

      The Senate Budget and Appropriations Committee reports favorably Senate Bill No. 1909 (1R).

      Senate Bill No. 1909 (1R) expands the current sales and use tax exemption for sales of aircraft and aircraft repair service. Currently, aircraft sold to regulated commercial carriers, and the repairs to such aircraft, are exempt. This bill exempts the charges for services involved in maintaining, servicing or repairing any aircraft, including machinery or equipment to be installed on such aircraft and replacement parts therefor, if the services are performed at an aircraft facility in the State.

      As reported, this bill is identical to Assembly Bill No. 2470 (2R) (LeFevre/Blee).

FISCAL IMPACT

      In a fiscal note prepared by the Office of Legislative Services (OLS), the OLS notes that there are not enough data collected by the Division of Taxation to estimate the full loss of revenue. The division is estimating the loss for services to be $900,000 per year based on the only data that are available -- sales tax filings by fixed base operators and others that service and repair non-commercial and recreational aircraft. It reports these vendors remitted an average of $890,361 per year for the last two calendar years for which data are available. The division states further there are no data available to estimate the sales tax loss that would result by exempting machinery and equipment to be installed on non-commercial and recreational aircraft.