New Jersey is set to implement a 10-day sales tax holiday for school supplies and select electronics as a way to offset inflation, the state’s three top Democrats announced Wednesday. .
The move would exempt school and art supplies, sports equipment, computers and certain computer accessories from the state’s 6.6% sales tax between Aug. 27 and Sept. 5 under a program that would cost the state about $75 million in lost revenue, the governor said. said Phil Murphy during a press conference at Red Bank.
“As inflation, I need not say but repeat, is a central concern around every kitchen table in our state, now is the time to do so,” the governor said. “We can more than afford to provide this tax relief to our students.”
Assembly Speaker Craig Coughlin (D-Middlesex) has suggested that the 10-day back-to-school sales tax exemption will also apply to televisions.
“It’s money in the family’s pocket, money they can spend,” Coughlin said.
The bill that would allow vacations, sponsored by Gloucester County Democrats Senator Fred Madden and Congressman Paul Moriarty, does not mention televisions and would apply to computers worth up to $3,000. Previous versions of the bill placed this threshold at $1,000 and applied only to computers purchased for personal use. It’s unclear how those provisions will change as lawmakers move the bill forward ahead of the June 30 deadline to approve an annual budget.
Murphy declined to comment on whether the sales tax exemption will reoccur in future years. Coughlin said the issue will be considered during next year’s budget discussions.
The holiday is the second tax relief announcement top Democrats have made in as many weeks. Last Wednesday, Murphy and legislative leaders announced they would expand the proposed ANCHOR tax relief program, raising its funding to $2 billion a year. The program was expected to launch in the coming fiscal year with $900 million in funding in its first year.
“Make no mistake about it. This is the Legislature’s direct attack on inflation,” Scutari said Wednesday, referring to the sales tax exemption.
Nationally, prices have jumped 8.6% over the past 12 months, with food and energy prices facing the biggest increase, according to the Bureau of Labor Statistics. The Northeast saw slightly lower inflation of 7.5%,
The New Jersey Tax House
Democratic leaders in Trenton say they focused heavily on tax relief when drafting this year’s budget amid rising revenues that are expected to push budget reserves above $10 billion. . Some of that money will likely be used to increase spending beyond the roughly $49 billion Murphy proposed in March.
A panel of former senior budget officials convened by former Sen. Steve Sweeney earlier this month warned the state would likely reduce its surplus over the next five years — or sooner if the economy slips into a recession.
Murphy, Scutari and Coughlin seemed indifferent to Wednesday’s disaster.
“It’s something we have the money to do, and it gives that money back to taxpayers,” Scutari said.
New Jersey’s sales tax is the state’s second-largest source of revenue. It is expected to bring in nearly $12.6 billion in the next fiscal year, about 25% of the roughly $50.6 billion Treasury officials expect the state to collect from July 1.
A mixed reception
Progressives, Republicans and some labor leaders greeted Wednesday’s announcement with skepticism, calling the proposal a “trick” that would do too little to help struggling New Jerseyans or disproportionately benefit wealthy New Jersey residents. State.
“Sales tax changes, whether temporary or permanent, are not targeted, so guess who benefits the most? Wealthier residents who typically shop the most and have the ability to stock up during the holiday season,” said Sheila Reynertson, senior policy analyst at left-leaning think tank New Jersey Policy Perspective.
She said the sales tax exemption would do little to benefit New Jersey businesses if it were extended to online sales, which were included in the Moriarity and Madden bills introduced in January.
New Jersey Policy Perspective and other progressive groups have lobbied for the state to use its windfall revenue to create a child tax credit, expand the New Jersey income tax credit, and increase temporary relief families in need, among others.
Assemblyman John DiMaio, the leader of the Republican Assembly, in a statement called the proposal a “deaf tone,” saying it would do little to help New Jersey residents who struggling to make ends meet.
“It’s too bad they’re not really committed to providing long-term tax cuts like the Republicans,” he said. “It’s a red herring to make people think they’re not overtaxed when they are — and continue to be, with Democrats in charge.”
The Republicans’ budget proposal, which will not advance in the Democratic-led Legislature, seeks $4.5 billion in one-time tax refunds of between $1,000 and $1,500 and permanent tax cuts that include adjusting New Jersey’s tax brackets for inflation.
Their proposed discounts have higher income thresholds than those proposed for ANCHOR, a fact some Democrats were quick to point out on Wednesday.
“I try never to be political, but my friends on the other side are always focused on giving tax breaks to the top 1%, and we’re doing the exact opposite here,” Senator Vin said. Gopal (D-Monmouth). at Red Bank on Wednesday.
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