LEGISLATIVE FISCAL ESTIMATE

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 1522

STATE OF NEW JERSEY

220th LEGISLATURE

DATED: JULY 1, 2022

SUMMARY

Synopsis:	Establishes annual sales tax holiday for certain retail sales of computers, school computer supplies, school supplies, school art supplies, school instructional materials and sport or recreational equipment.
Type of Impact:	Annual State revenue loss.
Agencies Affected:	Department of the Treasury.

Office of Legislative Services Estimate
Fiscal Impact	FY 2023 and Each FY Thereafter
Annual State Revenue Loss	$20 million to $60 million

· The Office of Legislative Services (OLS) expects the sales tax holiday to reduce State revenues by roughly $20 million to $60 million annually. 

· The OLS infers that industries affected by this holiday account for roughly 25 percent of total sales tax collections.  The OLS assumes anywhere from 25 percent to 75 percent of sales in those industries are attributable to items that would be exempt from taxation during the sales tax holiday.

· The OLS notes that the sales tax holiday will likely encourage consumers to shift some of their purchases into the sales tax holiday period that would have been taxable otherwise.  The OLS expects this shift, and its impact on revenues, to fall within the OLS’s stated range of revenue loss.

BILL DESCRIPTION

      This bill establishes an annual back-to-school sales tax holiday during the ten-day period up to and including Labor Day.  During this ten-day period, certain retail sales of school supplies and equipment and sport or recreational equipment sold to an individual purchaser for non-business use are exempt from the sales and use tax. 

FISCAL ANALYSIS

EXECUTIVE BRANCH

      None received.

OFFICE OF LEGISLATIVE SERVICES

      The OLS expects the sales tax holiday to reduce State revenues by roughly $20 million to $60 million annually.  The OLS infers that industries affected by this holiday account for roughly 25 percent of total sales tax collections.  The OLS assumes anywhere from 25 percent to 75 percent of sales in those industries are attributable to items that would be exempt from taxation during the sales tax holiday.  Based on monthly sales tax revenues from August sales activity of $835 million to $935 million over the last three years, and adjusting for the 10-day exemption, the OLS calculates the annual State revenue loss of the bill at $20 million to $60 million, beginning in FY 2023.

      The OLS notes that the sales tax holiday will likely encourage consumers to shift some of their purchases into the sales tax holiday period that would have been taxable otherwise.  The OLS expects this shift, and its impact on revenues, to fall within the OLS’s stated range of revenue loss.

Section:	Revenue, Finance and Appropriations
Analyst:	Jordan M. DiGiovanni Revenue Analyst
Approved:	Thomas Koenig Legislative Budget and Finance Officer

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).