New Jersey Legislators Seek Sales Tax on Carpet In
Trenton, NJ, June 21—-Senate Democrats in New Jersey are pushing a $175 million expansion of New Jersey's 6 percent sales tax to include everything from carpet installations to gym memberships and Internet downloads, according to the Express-Times.
In a party-line vote, the Senate Budget Committee approved the plan 9-6 Monday. The increase, pushed by Sen. Bernard Kenney, D-Hoboken, is counted on to fund acting Gov. Richard J. Codey's $27.4 billion proposed 2006 budget.
Business groups assailed it as a major hit for both the state's companies and citizens.
"It's like they went literally through a laundry list (of new items to tax), I think, without looking at the downside," said Arthur Maurice, executive vice president of the New Jersey Business and Industry Association. "It definitely needs more thought. This tax on computer downloads could have phenomenal implications."
Under the plan, online sales would be taxed in the same manner as mail-order transactions. Catalogue retailers such as L.L. Bean are now required to log sales to New Jersey customers and remit the appropriate tax to state collectors.
Maurice and other opponents of the tax bill said the process would be hazier in the case of Internet sellers. Unclear is who would collect the new revenue and how the rules would be enforced in the decentralized world of the Internet.
According to the bill, New Jerseyans would shell out more for currently untaxed goods and services not found online.
It would also create the new category of "digital goods," or any subscription to a Web site, or downloaded or digitally transferred product.
Targeted would be music-download services such as iTunes, which charges users 99 cents per song. That fee would go up to $1.05 under the legislation. Internet users who subscribe to Web outlets such as online journals and pornographic sites would also pay a 6 percent tax on any fees.
Supporters contend it is designed to modernize the state's tax laws in the Internet age.
"What the modernization initiative would do is treat as the same products or services you download off the computer as those you purchase in the store," said Tom Vincz, a spokesman for state Treasurer John McCormac. "This is about uniformity."
Senate Minority Leader Leonard Lance, R-Hunterdon/Warren, worried the state was getting too tax-happy.
"We shouldn't be raising taxes this year. It makes us less competitive with surrounding states," Lance said.
The legislation's fate was unclear in the Assembly, where leaders have promised to avoid tax increases. Under state law, all tax increases must start in the Assembly.
