Changes could be coming for some of the people doing business in New Jersey’s Urban Enterprise Zones because the Christie administration is proposing a 3.5 percent tax on some business to business transactions. Elizabeth Mayor Chris Bollwage told NJTV News Managing Editor Mike Schneider that this will hurt businesses, but consumers will still only have to pay 3.5 percent sales tax in these zones — half the normal rate.
Bollwage said that he first saw this proposal when the budget was introduced and not a lot of people know about it. He said that it is now coming out to the forefront and he contacted his representatives about it. He said this is a new tax on local businesses in Urban Enterprise Zones.
“There are 32 [Urban Enterprise Zones] in the state. We have been awarded one of the best in the nation at one point, but Gov. Christie has methodically over the last four years reduced the benefits of the Urban Enterprise Zone. This is just another nail in the coffin of Urban Enterprise Zones throughout the state,” said Bollwage.
The Urban Enterprise Zones were set up under Gov. Tom Kean and were originally the idea of Secretary Jack Kemp, said Bollwage. He said that the zones have a reduced sales tax for areas where the money paied on the reduced sales tax comes back to that zone for economic investment. The zones are often referred to as blighted.
“We wouldn’t have the Jersey Gardens Mall if it wasn’t for the Urban Enterprise Zone. We wouldn’t have some of the major developments in Elizabeth. Between 1993 to 2002, we generated about $1 billion in investment in the city of Elizabeth alone. That wouldn’t have happened without the Urban Enterprise Zone, the ability to give loans, the ability for more walking police, the ability for the businesses within those zones to buy equipment and structures that would enhance their business tax free,” said Bollwage.
Bollwage said that Christie is clever because he is leaving the 3.5 percent sales tax for the consumers, which is half of the normal sales tax. He said that all of the other benefits of the Urban Enterprise Zone have been eliminated under the Christie administration.
“Christie has been really diabolical when it comes to urban areas. The ability for his administration to attack the economic incentives that occur in urban areas has historically never happened before,” said Bollwage.
Bollwage said that it is interesting that Christie wants to eliminate the realty tax, which is generating $300 million per year. He said that Christie would like to eliminate the taxes that benefit the wealthier, the people who can afford to sell a house and pay an extra $6,000, as opposed to helping people who really need a break on the sales tax, the mom and pop businesses of New Jersey and Urban Enterprise Zones. He said that once again even the Chamber of Commerce has been extraordinarily silent on this issue when this affects a core constituency of theirs and they should be out beating the drum to help these people.
“At one time when we were able to work the Urban Enterprise Zones to the fullest, we had over 1,000 businesses in the city of Elizabeth signed up. Because Christie has taken away administrative funds over the last three years, the amount of businesses that are signed up in Urban Enterprise Zones has steadily decreased because no one is going out after him. So it is a chicken and egg syndrome because Christie will then say there is nobody in the Urban Enterprise Zone any more. We are going to lose the ability to enhance businesses as a result of this. We are going to lose the ability to encourage businesses to grow in Urban Enterprise Zones,” said Bollwage.