Gov. Murphy’s ‘millennial taxes’ will cause exodus, GOP argues
It’s not just the big tax increases in Gov. Phil Murphy’s budget that are stirring opposition.
Republicans, at least, contend some of the more narrowly targeted proposals amount to what they’ve dubbed "millennial taxes." And the one tax hike that drew opposition at the first public hearings on the budget was the idea of big new taxes on e-cigarettes and related products.
Senate Minority Leader Tom Kean Jr., R-Union, said taxes on rides arranged by services such as Uber and Lyft, or home rentals done through companies like Airbnb, take aim at the burgeoning sharing economy.
“These services are extremely popular with millennials,” Kean said. “These are not just new taxes that adults will pay. Young adults will pay these taxes.”
Assemblyman John DiMaio, R-Warren, said New Jersey risks diminishing its future if it encourages millennials to move away by raising the costs of the services they use.
“Just the folks that we need to (attract) – the younger people in particular,” DiMaio said. “Higher-education younger people. Lower-income folks who hope to crawl out of that abyss.”
A report published last year by New Jersey Future found that the number of people age 22 to 34 had grown 6.8 percent nationally between 2000 and 2013 – but was down 2.3 percent in New Jersey.
Acting Treasurer Elizabeth Maher Muoio said the tax on home-sharing rentals is modeled on a bill sponsored by Sen. Paul Sarlo, D-Bergen, the Senate budget committee chairman, and others and is similar to a tax levied by 39 other states. The budget anticipates $15 million from that tax.
Last year, lawmakers approved taxes on home-share rentals, with Airbnb’s cooperation, but then-Gov. Chris Christie vetoed it.
More than a dozen states and cities have put a fee on rideshares. Muoio said Massachusetts charges 20 cents a ride. The details of what Murphy is proposing haven’t been released, but it appears the budget projects the tax would generate $12 million.
But neither are new ideas, said Assemblywoman Eliana Pintor Marin, D-Essex, the Assembly Budget Committee chairwoman.
“I don’t think that anything that’s been proposed with regards to that is anything different that other states haven’t done so already,” Pintor Marin said.
Senate Republicans have started an online petition and campaign titled #DontTaxMyRide, opposing the ridesharing tax proposal. It had 890 signatures, as of Monday.
Sen. Dawn Marie Addiego, R-Burlington, said the tax would penalize people who choose ridesharing services as a safe way to return home, rather than risk driving drunk. Sen. Declan O'Scanlon, R-Monmouth, said it could hurt some drivers' second jobs.
“We have a lot of Shore town residents who rely on the opportunity to provide rides through Uber and Lyft to make extra money during summer months,” O’Scanlon said.
Mark Anton of the New Jersey Vapor Rights Coalition said more than 150 vape shops closed in Pennsylvania when that state created a 40 percent wholesale tax on electronic cigarettes. The rate in New Jersey would be nearly double that at 75 percent, as proposed in a bill sponsored by Sen. Joseph Vitale, D-Middlesex, which Muoio said was the basis for Murphy’s proposal.
“This tax would just devastate our industry,” Anton said. “We would not be able to stay in business. Our stores would close. The storefronts would be vacant.”
Russ Jerczak, who owns eight Gorilla Vapes shops in New Jersey, said he put plans on hold to open another two when Murphy proposed the tax increase. He said the store closures that would result from the tax increase would reduce sales, payroll and property tax payments, offsetting any gains from the new tax.
“I’m certain this tax will drastically decrease sales, crushing our ability to compete,” Jerczak said. “I understand the need to increase revenue for the expanded spending budget, but this tax will not do it.”
Christie proposed the e-cigarette tax four years ago, projecting it would raise $35 million. After opposition was raised at budget hearings, lawmakers didn’t go along, recalled Assemblyman John Burzichelli, D-Gloucester.
“Had robust discussion on that, chose not to do it,” Burzichelli said. “I suspect it will be the same this year.”