Press Release

Sales Tax Holiday is a Gimmick That Will Not Make New Jersey Affordable

Advocates, essential workers, and policy experts slammed a sales tax holiday proposed by Governor Phil Murphy and legislative leaders.

Published on Jun 22, 2022 in Tax and Budget

Advocates, essential workers, and policy experts from For The Many NJ slammed a 10-day sales tax holiday proposal announced earlier today by Governor Phil Murphy and legislative leaders, calling it a gimmick that will not make the state more affordable for low-paid workers and their families.

“This tax holiday proposal is a gimmick that will not provide meaningful relief to working families who need it most,” said Sheila Reynertson, Senior Policy Analyst at New Jersey Policy Perspective (NJPP). “Changes to the sales tax, whether they’re temporary or permanent, are not targeted, so guess who benefits the most? Wealthier residents who generally buy the most and have the flexibility to stock up during the holiday period. And if this tax holiday applies to online purchases, there’s no guarantee it will do anything to help local businesses here in New Jersey.”

Sales tax holidays are a poorly targeted form of tax relief, reduce state revenue that could be invested in other areas, are often exploited by retailers who raise prices, and can be difficult to administer, according to research by the Institute for Taxation and Economic Policy (ITEP), a non-partisan tax and budget policy think tank in Washington, D.C.

“Instead of a tax holiday that benefits New Jersey’s wealthiest residents, we should invest in working families like mine,” said Banessa Quiroga, leader of Make the Road NJ from Elizabeth, NJ. “I was an essential worker during the pandemic. My labor saved lives, but I’m still struggling to put food on the table and pay my bills. Expanding the Earned Income Tax Credit, and providing hazard pay and funds for excluded workers are a better use of our dollars. People who put their lives at risk throughout the pandemic shouldn’t be going hungry, especially when New Jersey has billions in surplus.”

Wealthier residents benefit the most from sales tax cuts and holidays as they have the most disposable income and can easily shift the timing of their purchases to take advantage of the holiday. Similarly, those who purchase more expensive items — like laptops and TVs — will benefit more from the tax holiday than those who cannot afford higher-priced goods.

“New Jersey’s communities of Color and low-income families are still struggling to recover from the pandemic, and a gimmicky sales tax holiday won’t provide them the relief they deserve nor safeguard us from future crises,” said Laura Bustamante, Policy and Campaign Manager of the New Jersey Alliance for Immigrant Justice. “Our racial and economic disparities are systemic, not episodic. They require lawmakers to dig deeper, beyond new computers or fancy big-screen TVs, and use the historic budget surplus to provide hazard pay, direct relief, and robust safety net programs.”

When New Jersey lawmakers cut the sales tax in 2016 from 7 percent to 6.625 percent, the state’s lowest income residents saved roughly $32 a year, while the top one percent of earners saved more than $720 a year.

“While working families appreciate measures such as a back-to-school sales tax holiday, they would have hoped to see some REAL, long-term targeted relief,” said Kevin Brown, SEIU 32BJ  Executive Vice President and New Jersey State Director. “These band-aid measures are a disservice to the role of the Legislature and governor’s office of protecting and building a New Jersey for all. Our workers need hazard pay, rental assistance, more Earned Income Tax Credit, more Excluded New Jerseyans Fund. As we continue the recovery process, we urge the authorities to come up with reasonable measures that improve affordability and level the playing field for the middle class and low-wage workers throughout the state.”

“The sales tax holiday isn’t a permanent fix; it has no staying power,” said Sue Altman, Executive Director of the New Jersey Working Families Party. “We’d far prefer the Legislature take up reforms that would provide real savings to working families. They can start by cutting the New Jersey Corruption Tax, which is the premium we all pay for living in a state with machine party bosses running the show. Unaccountable grifter insurance brokers, corporate tax incentives with no benefit to local communities, and tons of Christmas tree giveaways to politically connected professional services firms does nothing to make the state affordable for most residents. It does plenty, however, to help the politically connected buy shore homes.”

Earlier this week, essential workers and advocates from For The Many NJ called on lawmakers to use the state’s $10 billion surplus on targeted relief to low-paid workers and their families by: expanding the Earned Income Tax Credit (EITC), establishing a state-level Child Tax Credit, boosting cash assistance in WorkFirst NJ, providing essential workers with hazard pay, and fully funding the Excluded New Jerseyans Fund.

“There are better ways to get money to working- and middle-class families struggling to keep up with inflation and rising prices,” Reynertson added. “There are proposals in the Legislature right now that would expand the Earned Income Tax Credit and create a state-level Child Tax Credit, both of which put hundreds of dollars back in families’ pockets. A sales-tax holiday is needlessly complicated, untargeted, and expensive, all while failing to make the state more affordable.”

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For The Many NJ is a statewide coalition of more than 30 organizations working to expand funding for essential services and improve budget practices to meet current and future needs, especially for communities that have been historically left behind.