Sales Tax

The New Jersey state sales tax was raised by Democratic Gov. Florio to 7 percent in FY1991, cut back by the Republican legislature elected in the anti-Florio tax backlash to 6 percent in FY1993 and raised back to 7 percent by Democratic Governor Corzine in FY2007 after a budget showdown with the Democratic Assembly that led to a shutdown of state government. Corzine’s sales tax increase also expanded the sales tax to more than $400 million in services, recognizing that New Jersey’s sales tax, like most states, was outdated because it mainly taxed goods like automobiles and electronics, while the nation was moving increasingly to a service-based economy. New Jersey and other states are losing billions of dollars in potential revenue because of Congress’s decision not to tax Internet sales, a decision that puts state-based retailers at a competitive disadvantage. Overall, New Jersey’s sales tax is one of the most progressive in the nation because it exempts food, clothing and other necessities.