Yesterday, I joined Assembly Republican Leader Alex DeCroce and other
Assembly Republicans at a Statehouse press conference to unveil the first of a
series of Economic Solutions to get New Jersey
back on the right track - a sales tax holiday to stimulate immediate economic
activity, protect jobs, make New Jersey
more affordable. This is a first step and will be followed by strategies
for long term economic growth. Please see the attached news coverage for
more details.
New Jersey's sales tax needs
to be slashed in half during the upcoming holiday shopping season to help boost
the state's sagging economy, Republican lawmakers said Tuesday.
While business groups hailed the GOP proposal, Governor Corzine and other
Democrats gave it a cool reception. Corzine plans his own economic address
Thursday before a joint session of the state Legislature.
Under the plan unveiled Tuesday by Republican leaders from both the state
Senate and Assembly, the sales tax would fall from 7 cents per dollar to 3.5
cents beginning this Thanksgiving and lasting through Jan. 4.
The Republicans said the initiative is about more than simply pandering to
state residents who are leery of the multibillion-dollar federal bailouts going
to banks on Wall Street.
Reducing the sales tax, which covers items ranging from luxury cars to
laundry detergent, will pump up businesses that employ state residents. And it
should lure shoppers into New Jersey
by getting under the sales tax rates in New York
and Pennsylvania for five weeks,
they said.
"What we need to do is kick-start the economy," said Senate
Minority Leader Tom Kean Jr., R-Union. "I think it's time to be
aggressive."
The GOP proposal was praised by business groups who fear lagging automobile
sales and rising unemployment are signs of a larger statewide economic
slowdown.
"As consumers look for ways to improve their family budget, a sales tax
holiday would help them, their local businesses, and help stimulate New
Jersey's entire economy," said John Galandak,
president of the Commerce and Industry Association of New Jersey. "Many
companies simply can not afford slow sales during the busiest shopping
season."
But Jon Shure, president of the liberal think tank New Jersey Policy
Perspective, cited the potential for a huge loss in revenue as a reason to
oppose the tax cut.
"This is unlikely to deliver the benefits its proponents hope for and
could make matters worse," Shure said. "The state income tax and
sales tax already will take a hit from the bad economy."
The $33 billion fiscal 2009 budget enacted earlier this year was balanced
with more than $8 billion from the sales tax - the second largest single source
of revenue.
Official first-quarter revenue reports aren't expected to be released by the
state Department of Treasury until later this week, but Republicans predicted a
drop of about 5 percent in sales tax revenue.
"Adding to those losses is like saying, 'I'm starving so I think I'll
go on a diet,' " Shure said.
Assembly Speaker Joe Roberts, D-Camden, praised the Republicans for offering
new ideas, but said "the question is whether we can afford this right
now."
"We'll give this idea its due consideration," he said.
Senate President Richard J. Codey couldn't be reached for comment Tuesday.
Corzine, in a statement issued by a spokesman, pointed to $600 million in
budget cuts made earlier this year and another $500 million that are being
readied.
"Removing five to six weeks of revenue will not help people get through
this financial storm when they are focused on keeping their jobs and homes
right now, not their holiday shopping," said Corzine spokesman Robert
Corrales.
State GOP pushes for sales tax markdown
Wednesday, October 15, 2008
By Claire Heininger
Newark Star-Ledger
Setting up a clash with Gov. Jon Corzine, Republican lawmakers Tuesday
proposed slicing the state sales tax in half during the holiday shopping
season, saying it would help consumers and merchants beset by fears of a long
economic downturn.
The plan -- unveiled just two days before Corzine's scheduled presentation
of his own economic stimulus package -- would cut the 7 percent state sales tax
to 3.5 percent from Thanksgiving through Jan. 4. It also would halve the sales
tax in Urban Enterprise Zones, which already charge a discounted 3.5 percent,
to 1.75 percent.
Republicans say it would be the longest "tax
holiday" ever set by a state.
"We must do this," said Senate Minority Leader Tom Kean Jr.
(R-Union). "We cannot afford not to do it."
While several leading business groups praised the plan, it got a cool
reception from Democrats, who said there are more pressing needs deserving of
the state's scarce resources. Others cautioned it would not be a sure-fire
success.
Corzine said he will consider the Republicans' idea, but with sales-tax
collections and other state-funding sources already dropping, "I'm not
sure this is the time we should be doing that."
"You have to decide: Where can we get the best bang for limited
dollars?" the Democratic governor said at an appearance in Camden.
"If we had unlimited resources, there's no question we would do that. But
we have to figure out what things we can afford -- what will have the best
long-run impact on improving the lives of the people of the state of New
Jersey."
Top Democrats say Corzine's proposal to boost the economy, to be outlined in
a speech to the Legislature tomorrow, is expected to include speeding up public
construction projects to put people to work quickly, redirecting some spending
to help families heat their homes this winter, and providing help for
homeowners in immediate danger of losing their homes.
Business-friendly changes to the tax code are also on the table, according
to Sen. Raymond Lesniak (D-Union), chairman of the Senate Economic Growth
Committee.
Corzine has asked department heads to prepare an extra $500 million in
possible cuts to the current budget, and Tuesday he named Jerold Zaro, the
former New Jersey Highway Authority chairman, his economic growth czar.
New Jersey expected to collect
$8.7 billion in sales tax revenue for the fiscal year that began July 1, but
officials predict the sagging economy will shrink that. Republicans estimated
their tax holiday will take away $500 million of that revenue -- half the
amount that was collected during the same five-week period last year -- but
predicted the loss would be largely offset by increased business activity. They
said budget cuts could make up the rest.
While Treasury Department spokesman Tom Vincz could not give an exact amount
of money the state took in from the sales tax during the five-week holiday
period in 2007, he said about $847 million was collected in December.
While other states have experimented with suspending their sales tax or part
of it, Republican lawmakers said their proposal goes further because those
suspensions were shorter and limited to items such as school supplies.
ACTION AND REACTION
A bill that would have established a sales tax holiday for computers and
school supplies during the first weekend of August each year was criticized in
June by the state Sales and Use Tax Review Commission, which concluded,
"It is unlikely that consumers would enjoy a true savings."
"Confident that the public will be enticed to the stores by the
prospect of a tax-free holiday, retailers may actually raise their 'sale'
prices during a tax holiday or elect not to discount regular prices," said
the commission, whose members are appointed by the governor and legislative
leaders. The bill was introduced by Sen. Fred Madden (D-Gloucester) in May.
Though several business groups praised the GOP plan as a kick-start for the
crucial holiday shopping season, Jon Shure, president of the liberal Trenton
think tank New Jersey Policy Perspective, said a tax cut "could make
matters worse" by depriving the state of revenues that could be spent on
"people most in need."
Joseph Seneca, an economics professor at Rutgers
University's Bloustein School of
Policy and Planning, said the state must carefully weigh the returns from a tax
holiday in comparison with other priorities. He said the question is:
"What could we have bought otherwise with that to stimulate the economy?"
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