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With budget season in full swing, a coalition of more than 100 businesses, labor and nonprofit groups penned a letter to the Legislature urging lawmakers to oppose the proposed 2.5% Corporate Transit Fee (CTF) on the state’s most profitable corporations as well as a Warehouse Fee.

The issue has been at the center of New Jersey news and politics since Gov. Phil Murphy’s February Budget Address. He proposed the controversial taxes at that time, right on the heels of the Corporate Business Tax (CBT) surcharge’s sunset. That led to immediate backlash from the business community, as NJBIZ has reported.

“As leaders of our state’s major business associations covering sectors and regions throughout the Garden State, the New Jersey Business Coalition (NJBC) broadly representing the state’s diverse business community strongly urges you to oppose Gov. Murphy’s proposed billion-dollar business tax increase and new Warehouse Fee tax increase within his FY25 state budget proposal that are unnecessary and will do significant harm to New Jersey’s overall business climate,” the NJBC wrote.

The coalition says the actions would further hurt New Jersey’s economic competitiveness in terms of creating and attracting both jobs and capital.

“Because corporations can pick and choose their investment locations based upon where they get the best return on investment,” the letter continues, pointing to Pennsylvania, which is in the midst of cutting its corporate tax rate.

An ‘unrelenting tax environment’

“New Jersey’s business climate already has an unrelenting tax environment. We are the only state in the nation that is in the top tier of the four major taxes with the highest corporate tax rate if this proposal becomes law (still the fourth highest if it does not), the highest property taxes, among the highest top individual income tax rates and a high state sales tax rate,” the group wrote. “If you in the State Legislature want to improve our economy and organically grow our revenues to be able to pay for things like StayNJ, then this tax increase is certainly not the answer.”

The letter describes the CTF as unnecessary, difficult to understand (given Murphy’s comments before the Budget Address) and harmful.

“Businesses need predictability, stability, and certainty to properly budget and plan for growth and/or slowdowns,” the correspondence continues. “Investments cannot be made absent that. This type of roller-coaster tax policy with a last-minute, retroactive about-face on a temporary tax that just sunset per statute breeds mistrust and hurts our image to employers – considering investment, expanding, or relocating. The dedication to NJ Transit is also poor public policy.”

Bad for business

Regarding the proposed $10 million Warehouse Fee, the group describes the tax as unnecessary and anti-business.

“This tax will further hurt the competitiveness within many important sectors of our economy – retail, manufacturing, logistics, and other industries that work with them,” NJBC wrote. “In practicality, this is a tax on every item that goes into any box in New Jersey.

“This ill-conceived tax is punitive and does not seem to serve any public policy goal given the scant detail that has been provided on how the money will be utilized. As such, this tax must also be rejected.”

In closing, the coalition stressed these two proposed tax increases will further hurt the business climate.

“And will ultimately do more harm to our shared goals of growing our budget revenues than the shorter-term degenerating revenues estimated to be generated,” the letter concludes. “Based on all the above reasons, the undersigned organizations respectfully urge you to oppose the two proposed tax increases (CBT increase and Warehouse Fee) and find alternatives to balance the FY25 state budget including further controlled spending.

“Our organizations stand ready to work with the Legislature to find long-term solutions that would be jointly beneficial to the state budget, our economy, employees, and employers alike,” the letter said.

These issues will remain front-and-center with budget hearings underway as the process plays out leading to a June 30 deadline.

The full letter – including signing organizations – is available here.