Back-to-school supplies — from notebooks to laptops — will be tax-free in New Jersey for 10 days later this summer under a sales tax holiday announced Wednesday by Gov. Phil Murphy and his fellow Democrats who lead the state Legislature.
State Senate President Nicholas Scutari, D-Union, and state Assembly Speaker Craig Coughlin, D-Middlesex, joined Murphy to unveil the plan, which would waive New Jersey’s 6.625% sales tax on all back-to-school supplies from Aug. 27 to Sept. 5.
The items that can be purchased tax-free will include a range of school supplies, including pens, pencils, notebooks, art supplies, text books, laptops, and computer supplies, as well as sports and recreational equipment and bicycle helmets, officials said. Clothing and shoes are already exempt from sales tax in New Jersey.
“As inflation — I need not say but I’ll repeat — is a central worry around all of our state’s kitchen tables, now is the time to do it,” Murphy said during an event in Red Bank detailing the plan. “We can more than afford to give our families and students this tax break.”
The holiday will apply to both online and in-person sales, said a state Treasury spokeswoman, who figured the state will forgo $75 million in tax revenue as a result.
Still, critics — including not just Republicans but a left-leaning think tank — faulted the move as an insufficient “gimmick.”
The initiative is the newest agreement Murphy and top lawmakers have forged as they negotiate a final state budget, due June 30.
It comes as households are grappling with rapidly climbing costs on a range of basic goods like food, gas and shelter after US inflation hit a new 40-year high of 8.6% in May.
Scutari said this is the Legislature’s “direct attack on inflation,” coming at a time when the state is awash in tax revenue.
“This is something we have the money to do, and this is giving that money back to taxpayers,” the Senate president said.
Coughlin said 2 million families have K-12 students in New Jersey, and the average family spends about $800 on back-to-school shopping. If that figure is accurate, it would amount to a savings of about $50 on school supplies for the average family.
Murphy said the savings could be “a couple hundred bucks” for some.
Coughlin said the plan will benefit not only families but students headed to college, teachers who often pay for their own supplies, and small businesses.
“As we head into summer where we’re all bracing for higher prices … this is gonna bring some well-deserved relief,” he said. “It’s another step in bringing affordability to New Jersey.”
This the latest in a string of tax relief proposals Murphy and fellow Democrats have put forth after a tense November election in which Republicans gained seven seats in the Legislature. Last week, the governor and lawmakers announced a new property tax relief program will get expanded.
The Legislature still has to approve the school supply tax holiday, though that appears likely since Democrats control both houses and leaders have reached a deal on it.
But shortly after Wednesday’s announcement, Republican lawmakers, policy experts, and advocates slammed the proposal, dismissing it as a gimmick that will not make the state affordable for low-paid workers and their families.
With online purchases included, “there’s no guarantee it will do anything to help local businesses,” said Sheila Reynertson, senior policy analyst at left-leaning think tank New Jersey Policy Perspective.
“This tax holiday proposal is a gimmick that will not provide meaningful relief to working families who need it most,” Reynertson said. “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.”
Assembly Minority Leader John DiMaio, R-Warren, said in a statement the tax holiday is an “underwhelming gimmick when people need real relief.”
“How tone deaf are they? It’s a shame that they don’t make a true commitment to provide long-term tax cuts like Republicans have,” DiMaio said. “This is a red herring to make people think they aren’t being overtaxed when they are and continue to be with Democrats in charge.”
DiMaio referenced 2021 data from statista.com that estimates consumers expect to pay about $434 on school supplies and electronics, which would amount to a savings of roughly $28 for the average family.
“When you can’t afford living in New Jersey, this short holiday on notebooks and pencils is meaningless,” DiMaio said.
Senate Minority Leader Steven Oroho, R-Sussex, in response to the announcement, urged state leaders to act upon an $8 billion tax relief proposal from Senate Republicans that includes $1,500 in immediate rebates.
“I don’t think the 13 cents in sales tax savings on a $2 box of pencils that Democrats have proposed amounts to substantial relief for New Jersey families,” Oroho said. “And do we really expect people to wait until the very last week to begin to prepare for the upcoming school year. Trenton Democrats have lost touch with reality.”
Technically, anyone who shops in New Jersey — not just families, students, or even state residents — will be able to take advantage of the tax holiday. That means you’ll be able to skip the tax on a laptop or bike helmet even if you’re not going back to school or live in another state.
Leaders said that’s not an issue, noting about 16 other states have already implemented similar holidays.
“The other states that have done it — the other effect … is getting people back into brick-and-mortar stores,” the governor said. “And God knows, we could use that.”
The tax holiday as it currently stands will be a one-time initiative, but Coughlin said he is open to considering doing it in future years.
“We’ll look and see if it was a success,” the Assembly speaker said. “We’ve got to measure things as we go forward.”
Versions of this proposal have been in the state Legislature since 2006, with some calling for an annual program.
Murphy and lawmakers have eight days to finalize a state budget for the new fiscal year that begins July 1. The state has to enact a spending by the constitutional deadline of June 30.
The governor’s current budget proposal would lift state spending to a record $50 billion in the wake of a surge in tax revenue.
Sources in the Statehouse say a final budget likely won’t get introduced until next week, but Murphy and state leaders on Wednesday said they are optimistic a budget will get done by the deadline.
“You’ll be on the beach,” the governor told reporters.
”No pictures, though,” he added, jokingly.
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