The Affordability Crisis Meets the Sales Tax
the staff of the Ridgewood blog
Ridgewood NJ, As New Jersey lawmakers increasingly prioritize “affordability,” Assemblyman Christopher DePhillips (R-Bergen) is putting those talking points to the test. On Thursday, DePhillips introduced new legislation designed to cut the state’s sales and use tax rate from 6.625% down to 6%.
The Republican legislator is pushing to reduce what he calls a regressive tax that disproportionately burdens lower-income residents and working families.
“The state sales tax is regressive, disproportionately burdening working families and people living paycheck-to-paycheck. Every time a consumer goes shopping, Trenton takes its cut,” DePhillips said.
Why the Sales Tax is Under Scrutiny
The sales tax is New Jersey’s single largest source of revenue for the state budget’s general fund, generating more than $14 billion annually. However, critics argue that the state’s approach to taxation is contributing to an affordability crisis.
DePhillips noted that the Murphy administration and Trenton Democrats recently passed a nearly $59 billion budget funded partly by $843.4 million in increased tax revenue from hikes on areas like home sales, cigarettes, and gambling.
“It’s time to test their election-year talking points on affordability by pressuring them to slash the sales tax to help struggling families. This is a tax cut people will feel every day, not a gimmick or rebate that only gets processed at politically convenient times,” DePhillips stated.
Competitive Edge and Local Benefits
Proponents of the sales tax cut argue that lowering the rate would have several immediate benefits for both consumers and the state economy:
- Cost Reduction: The costs of essentials like car repairs, energy, and other unavoidable expenses would decrease.
- Economic Boost: Local economies are expected to get a boost as consumers retain more of their income.
- Regional Competition: New Jersey’s current rate of 6.625% is higher than neighboring Maryland (6.0%) and close to Connecticut (6.35%). Furthermore, Delaware imposes no statewide sales tax. Lowering the rate would make New Jersey more regionally competitive.
If the bill is passed and signed into law, the new 6% rate would take effect on January 1, 2026.
Assemblyman DePhillips is challenging the Democrat-controlled legislature to address what he views as the root causes of the affordability crisis by supporting his bill.
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