TRENTON – Assembly Budget Committee Chairman Lou Greenwald, (D-6) of Voorhees, is drafting a tax reform plan that would give municipalities the option to raise “local option revenues” that would enable towns to keep a portion of the sales tax revenue within its borders.
Voters in each town would decide whether to implement a local sales tax no greater than one percent.
Greenwald described the plan as a “shift” of revenues.
His plan also calls for reducing the sales tax from 7 percent to 6 percent. The state sales tax was raised by 1 percent in the summer of 2006, following a government shutdown, and signed into law by Gov. Jon Corzine.
Greenwald said the local sales tax revenues would be conditioned such that every dollar and cent raised would result in a reduction in the levy for property taxes, which he calls “regressive” and “discriminatory.”
He dismissed the idea for a constitutional convention, saying it would be a “coward’s way out” of delaying the hard work of finding specific solutions to address the property tax burden.
While Greenwald said his plan is a step in reducing the property tax burden that has caused so many residents to move out of state, Assemblyman Declan O’Scanlon, (R-12), of Red Bank, the Republican budget officer, fears the local option revenue will be nothing more than a “shell game,” since one pot (the state sales tax revenue) would merely be shifted to another pot (the local sales tax), and would not address the root problem of excessive spending.
“If you don’t give towns the tools to control costs, whatever taxes you use, the costs will continue to skyrocket,” he said.
He added that with less state sales tax revenue, it could mean more cuts, especially in education funding and Medicaid, among other programs.
“You can’t pull the money out of thin air.”
Officials said Greenwald is fine-tuning his proposal and hopes to introduce it soon.