Bill to enhance the UEZ Program passes Assembly Budget Committee
Tuesday, October 07, 2008

Good morning, Chairman Greenwald and members of the Assembly Budget Committee. My name is Kathleen Davis and I am the Executive Vice President & COO of the Chamber of Commerce Southern New Jersey. As you may know, the Chamber represents 1,800 member companies from the seven southern counties, Philadelphia and northern Delaware, which employ more than 300,000 individuals.

The Chamber of Commerce Southern New Jersey strongly supports A-2720 (Vas/Burzichelli/Pou), which allows for a sales tax exemption for all qualified business urban enterprise zone purchases at the point of sale. Current law requires businesses with a least $3 million in annual gross receipts to pay the full 7 percent sales tax at the time of their purchase, and then apply for a refund of taxes paid to the Division of Taxation.

In 1984, Urban Enterprise Zones (UEZ) were created to encourage urban revitalization and act as a cornerstone for economic growth and development in blighted communities statewide. As originally enacted, businesses that operated in these designated areas could buy most products without sales tax at the point of purchase, as well as several other benefits the program provided. The UEZ program was successful in stimulating the economy in several distressed cities in New Jersey, eight of which are located in Southern New Jersey.

Several Chamber member companies are located in Urban Enterprise Zones. These companies range from glass manufacturers to specialty chemical companies that provide not only revenue to our state, but also jobs for many living in these economically disadvantaged areas. These businesses must meet one or more certification standards in order to become a “qualified business,” one of which being that 25 percent of their full-time employees are residents from within the zone.

In 2006, the Chamber testified in opposition to eliminating the point of sale sales tax exemption for larger businesses. The new process required UEZ businesses to pay the sales tax up front and apply for the sales tax rebate from the State. This administrative change has imposed unnecessary and costly administrative requirements on businesses in UEZs, making participation in the program much less desirable and beneficial.

One Chamber member affected by the change explained that it takes the equivalent of a half-time person annually to comply with the new UEZ requirements, not to mention hundreds of hours of auditing time during those instances when the semi-annual submissions are made to the State. Another Chamber member, who testified with the Chamber in 2006 in opposition to changing the program, explained that manufacturers have a hard enough time making ends meet in New Jersey without adding additional unnecessary burdens.

The Chamber believes that by changing the UEZ program back to its pre-2006 status the legislature will send a message that government is serious about fostering economic growth and helping struggling businesses during hard economic times.

For these reason, we urge you to support A-2720 (Vas/Burzichelli/Pou).