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Proposed $30.9 Billion Budget Hits Auto Buyers’ Wallets

Mar 30, 2006

In his first budget address, Governor Jon Corzine proposed a $30.9 billion State budget to a joint session of the Legislature. The proposed budget is $2.6 billion higher than last year’s budget, with more than $1 billion of the increase earmarked for payments to the public employee pension system that had not been made for nearly a decade. In his proposed budget, Governor Corzine has recommended a series of tax increases, several of which impact the retail automotive industry, including the following: · A 1% increase in the State sales tax, from 6% to 7%, will increase the cost of car and truck purchases and leases, which are among the largest purchases consumers make. · A corporation business tax surcharge of 2.5%. While this proposal may impact some larger, well-performing dealerships, the Administration is also proposing to allow a larger set of anti-growth taxes on businesses to expire, including those on net operating losses. This proposal could actually benefit many dealers who have seen a downturn in their business. · A one time surcharge on new luxury car registrations of 0.4% on any car with a sticker price of $45,000 or more, as well as vehicles that receive EPA ratings of less than 15 miles per gallon, raising $17 million. Any vehicle costing more than $45,000 having an EPA rating of more than 40 miles per gallon will be exempt; · Sales tax to be collected at some level in each of the State’s Urban Enterprise Zones. The Legislature is currently reviewing the Governor’s budget proposal. The budget must be passed by the Legislature and signed by the Governor by July 1, 2006. NJ CAR will keep dealers informed of any budget proposals that may impact your business.