New Jersey's top corporate lobbyist has floated a sales tax increase as an alternative to Gov. Phil Murphy's controversial corporate transportation fee proposal 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 made it through negotiations.
Murphy first proposed corporate transportation fees as part of his budget speech 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 fee applies to New Jersey businesses with annual net revenues of $10 million or more, which Treasurer estimates are about 600. 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
Transit advocates have spent more than the past year advocating for a corporate tax earmarked for New Jersey Transit to address the agency's budget deficit.
Last year, the New Jersey Department of Transportation added hundreds of bus trips, expanded routes and added $30 million in new costs to its operating budget to serve warehouses dependent on New Jersey workers. 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, adding that they're looking at assets in lower-cost states like Texas, North Carolina, Tennessee and Florida. He said he was buying it.
Mr. Siekerka said the cost of corporate transportation is not only due to budget cuts and layoffs as companies try to balance their budget sheets when hit by new taxes, but also increases in the cost of every product a company offers. He argued that it would lead to.
However, progressive groups that support companies paying for transportation costs are pushing back against criticism from business groups, saying that large companies should pay a corresponding burden.
“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 incredible. It’s tone deaf,” President Eric Benson said. Progressive Coalition for the Many New Jersey.
“There is no reason to think that corporate travel costs will hurt companies, especially since these companies saw their profits soar while the corporate premium was in place.”
Benson blasted the business group's proposal to raise the state sales tax instead, 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 having the most trouble doing so.” Increases due to rising costs. ”
He pointed to a study by the left-leaning Institute for Taxation and Economic Policy that found the highest percentage of people paying sales tax were 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
