Bill > A5995

Introduced Session

This bill requires the Legislature to annually appropriate to the municipality in which a taxed sale is sourced an amount equal to the revenue that would be derived from a one percent tax rate on the sale. Sales are sourced in accordance with the requirements of the multi-state Streamlined Sales and Use Tax Agreement, which New Jersey is a part of pursuant to statute. For example, if a product is received by a purchaser at a business location of the seller, then the sale is sourced to that business location. If a product is not received by a purchaser at a business location of the seller, then the sale is sourced to the location where receipt by the purchaser occurs. Currently, the sales tax rate is 6.625 percent of the purchase price, or 6.625 cents for every dollar of the purchase price. This bill requires one cent of every 6.625 cents, or the amount collected from a one percent rate, to be distributed to the municipality in which the sale is sourced. Based on the executive certified revenue estimate for sales tax for fiscal year 2020, a one percent rate would yield about $1.7 billion. New Jersey's constitution already requires an amount equal to the revenue from a rate of half of one percent to be placed in the Property Tax Relief Fund (PTRF). Money in the PTRF may only be used to offset property taxes. Aid to municipalities is a form of offsetting property taxes because the aid allows municipalities to avoid increasing property tax rates. Pursuant to this bill, an amount equal to the revenue from a full one percent rate will be placed in the PTRF and will be distributed to municipalities based on where sales are sourced.

AI Summary

Committee Categories

Michael Carroll (R)*, 

Introduced, Referred to Assembly State and Local Government Committee (on 11/25/2019)

Official Document