Phil Murphy agrees to reduced sales tax in these 5 N.J. cities

Phil Murphy agrees to reduced sales tax in these 5 N.J. cities

For three decades, businesses in Bridgeton, Camden, Newark, Plainfeld, and Trenton were allowed to levy half the state's sales tax because they took part in the state's Urban Enterprise Zone program, which is designed to help boost economically struggling areas. That changed early last year, when the program expired in those cities -- the original five that took part in the 34-year-old program -- and then-Gov. Chris Christie declined to renew them.

03 Haziran 2018 - 04:23

But Gov. Phil Murphy signed a law this week to restore UEZs there for five years and extend the program until 2023 for other areas where the program was set expire before that time.

That means those five cities will rejoin the other UEZ areas throughout New Jersey where shoppers have to shell out only half the state's 6.62 percent sales tax -- 3.3 percent.

The new law (S846/A3549) -- which took effect immediately --  also requires the state to produce a report on whether the program should continue, be amended, or be discontinued. 

The bill would have reinstated a decades-old deal meant to spur economic growth in urban areas.

Democratic state lawmakers who sponsored the measure praised Murphy for signing it into law Thursday, saying it will help attract new businesses and bring customers to areas that need help.

"Urban Enterprise Zones have been an integral part of urban revitalization for many years now," said state Assemblyman Raj Mukherji, D-Hudson. "Extending their designation will help many cities remain economically competitive while spurring job growth and economic development."

The measure passed both houses of the Democratic-controlled state Legislature in April -- 54-19-0 in the Assembly and 27-5 in the Senate.

The sales-tax discount has been the most attractive part of the program, but it also includes other incentives -- such as a break on energy taxes, a subsidy for unemployment insurance, and tax credits for certain hires.

Though the program was originally supposed to end in 2003, state lawmakers voted in 2001 to extend it another 16 years.

But Christie, a Republican, did not take action on a bill last year that would have extended the program another two years when it expired in the original five cities. 

Christie said the program faced "apathetic participation" and had a "devastating impact on state revenues without any demonstrable benefit" to the cities.

He added that the state faced losing $40 million in "retail sales tax alone" if the program was extended in those cities.

Other areas that joined the program after 1983 were allowed to continue, though many were set to lose their status between 2019 and 2026.

Murphy, a Democrat who succeeded Christie in January, said during a radio interview earlier this year that the program is "smart policy."


"It gets action in downtown areas," he said in March. "It's a good economic proposition and it's particularly good for our urban communities." 

The question now is: What will the state's sales tax be a few months from now?

Currently, the sales tax in 6.625 percent. But Murphy has proposed returning it to 7 percent, reversing a deal Christie and Democratic lawmakers cut to reduce it in 2016 in exchange for a 23-cent hike in the state's gas tax. 

But Democratic leaders of the state Legislature continue to oppose Murphy's plan with a month to go before they must agree to a state budget by June 30.

Brent Johnson may be reached at [email protected] Follow him on Twitter @johnsb01. Find NJ.com Politics on Facebook.

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