TRENTON – Today, the New Jersey Conference of Mayors called for a level playing field between New Jersey brick-and-mortar businesses and out-of-state, internet-only retailers. Under current law, New Jersey businesses are required to collect and remit the 7 percent sales tax on products they sell, while internet companies are exempt. As a result, products from New Jersey store front businesses cost 7 percent more than the same product that can be purchased from an out-of-state online-only business – threatening local jobs, downtowns and higher property taxes.
“The fact that Internet retailers are able to sell their goods 7 percent cheaper than Main Street mom-and-pop businesses because New Jersey has not modernized its sales tax laws is unacceptable. This price advantage directly threatens our business communities which are critical for the viability of small towns across our State. A thriving business community translates into stable municipal budgets, and that’s important to Mayors and homeowners alike who want the right balance between efficient municipal services and stable property taxes,” states Gary Giberson, Mayor of Port Republic. “The local businesses in my town are vitally important to our overall fiscal health, and that’s why I support closing this sales tax loophole immediately.”
Recently, the New Jersey Retail Merchants Association announced the results of a study conducted by Rutgers University that found New Jersey is losing $171 million annually by failing to collect sales tax from these internet companies, despite the fact that the tax is still owed.
When the retailer doesn’t collect the sales tax, the obligation falls to the consumer to pay it – a confusing and unnecessary burden. Most consumers are unaware of that liability, as less than 1 percent of the $140 million believed to be owed in 2008 was actually collected.
“Certainly the hundreds of millions of dollars the State would collect by enforcing current law, would allow Trenton to pay down years of runaway debt, or aid in direct property tax relief for towns hit hard by the recession,” said Gary Passanante, Mayor of Somerdale. “There are many things we can be doing to help New Jersey businesses in this economy, but this is doing nothing more than giving them a black eye. It’s only fair to New Jersey businesses that if there is going to be a sales tax, it should be applied the same, whether a sale occurs online or in a store.”
State law requires any business with a physical presence in New Jersey, like buildings, property, employees or sales agents, to collect and remit sales tax, including on their website sales. A change to New Jersey’s sales tax law would apply only to out-of-state retailers that sell products online to the state’s consumers. Similar legislation has passed in California, Texas, Illinois and New York, requiring only those retailers who have online sales above a reasonable threshold to collect and remit the tax, thus protecting small businesses from undue regulatory burdens nationwide.
“The Conference of Mayors endorses e-Fairness and we look to our state leaders in Trenton to stand up in a bipartisan fashion for New Jersey businesses, New Jersey jobs, and New Jersey’s downtowns by leveling the playing field,” said Fanwood Mayor Colleen Mahr, Legislative Chair at the NJ Conference of Mayors. “All municipalities, regardless of how Republican or Democrat their voters may be, are at risk of losing downtown business unless we level the sales tax playing field as soon as possible.”
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