New Jersey's top corporate lobbyist proposes a sales tax increase as an alternative to Gov. Phil Murphy's controversial corporate transportation fee to help improve the finances of the beleaguered New Jersey Department of Transportation. did.
The current state sales tax is 6.625%, and has remained at this level since 2016 through an agreement with the then-governor. Chris Christie funds state transportation trust fund. Previously it was 7%.
But Michele Siekelka, president and CEO of the New Jersey Chamber of Commerce, said at a news conference Tuesday that “there is an opportunity within that range to go back to that 7% and dedicate that amount to the community.” New Jersey Transportation Authority.
“The sales tax increases every year due to inflation. Costs go up, and the sales tax goes up,” Siekerka said. Several members of the New Jersey Business Coalition, an industry group, joined him in opposing the corporate transportation fee proposal.
Representatives for Murphy's office and Senate Democrats (Senate majority) could not be reached for comment Tuesday afternoon.
A spokeswoman for Congressional Democrats, who control the House of Representatives, declined to comment on Mr. Ziekerka's sales tax proposal.
Murphy originally proposed returning the sales tax to 7% during budget negotiations in 2018, but the idea never passed.
In his budget speech, Murphy first proposed corporate transportation fees as a new dedicated source of funding for the New Jersey Department of Transportation as the state's public transportation agencies face a fiscal cliff. The New Jersey Department of Transportation projects that during the next fiscal year, from July 1, 2024 to June 30, 2025, he will experience a shortfall of $119 million. It is expected to grow to $917.8 million the following year. This is equivalent to about one-third of the agency's budget for fiscal 2026.
To help close some of the deficit, the New Jersey Transit Authority's board recently approved a 15% fare increase starting July 1, the first in nine years, and a 3% increase annually thereafter.
The transit fee applies to New Jersey businesses with net annual revenue of $10 million or more, which Treasury officials estimate totals about 600 businesses. The retroactive effective date is January 1, 2024.
These companies will pay a fee of 2.5% of gross profits. Estimated revenue for fiscal year 2025 will be $1.023 billion. Estimated revenue for fiscal year 2026 will be $859 million, down from about $1 billion collected from a similar corporate business tax levy on companies that earn more than $1 million and expire at the end of 2023. .
Murphy's proposal would effectively replace the existing corporate business surtax on top of the current top tax rate of 9%. New Jersey's corporate business taxes are the fourth highest in the nation, according to the Tax Foundation, a right-wing think tank.
New Jersey Transportation Budget Deficit
For more than a year, transit advocates have advocated for a corporate tax to help address the New Jersey Department of Transportation's budget deficit.
Last year, the New Jersey Department of Transportation added hundreds of bus trips and expanded routes to serve New Jersey worker-dependent warehouses, adding $30 million in costs to its operating budget. did.
However, business groups widely criticized the proposed corporate pass-through tax, arguing that it would make New Jersey less competitive and make it more expensive to do business.
“When companies have the opportunity to create 10, 100 or 1,000 jobs or build new facilities in the future, they will look for low-cost countries where they can do it,” Sierka said. he said.
Related:New Jersey Transportation Commission approves 15% fare increase on July 1 despite protests
“We're seeing a lot of New Jersey companies buying assets outside of New Jersey,” he said, “and in lower-cost states like Texas, North Carolina, Tennessee and Florida.” said.
Mr. Siekelka said the cost of corporate transportation is not just about budget cuts and headcount cuts as companies try to balance their budget sheets when hit by new taxes, but also the cost of every product a company offers. He argued that it would lead to an increase.
But progressive groups that support corporate transportation fees have pushed back against criticism from business groups, saying large companies need to pay their fair share.
“It's not surprising that large corporations don't want to pay their fair share, but to say something like this a week after all working families have paid their taxes and paid what they owe is incredibly tone-deaf. ” said President Eric Benson. Member of the Progressive Coalition for the Many New Jersey.
He said: “There is no reason to think that corporate travel costs will hurt businesses, especially as these businesses saw their profits soar while the corporate premium was in place.”
Benson criticized the business group's proposal to raise the state sales tax, writing in an email that “low-income households pay a higher percentage of their income in sales taxes than anyone else, and they are struggling to make ends meet.” These are the same households that are struggling the most.” Increases due to rising costs. ”
He pointed to a study by the left-leaning Institute on Taxation and Economic Policy that found the highest percentage of people paying sales taxes are those with the lowest annual incomes.
Daniel Muñoz covers business, consumer affairs, labor and economics for NorthJersey.com and The Record.
Email: munozd@northjersey.com; twitter:@Daniel Munoz100