N.J. Tax Up in Smoke

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N.J. Tax Up in Smoke

TRENTON, N.J. -- An increase that would make New Jersey's cigarette tax one of the highest in the nation passed the Democrat-dominated Assembly, then fizzled yesterday when a handful of Senate Democrats joined Republicans in opposition.

Budget-related bills that raise $2.7 billion in new revenues from, among other things, taxes on cigarettes, corporations and estates, have been bottled up by Republican lawmakers. They are refusing to vote for the bills until they see the full budget that Democratic lawmakers are preparing in conjunction with Gov. Jim McGreevey's administration, according to the Bergen Record.

The budget was scheduled for introduction Monday. The bill now may be introduced today, but since the only voting session on the calendar is Thursday, lawmakers were told to prepare for special sessions Friday and possibly Saturday and Sunday as well.

A key sticking point is McGreevey's plan to raise $950 million by overhauling the corporation business tax, which includes a new "alternative minimum assessment" that the administration says is aimed at companies that use loopholes to avoid paying their fair share of taxes. Opponents say the assessments will unfairly hit small businesses and lengthen the economic downturn. With the Senate evenly divided between Republicans and Democrats, McGreevey needs at least one GOP supporter to pass the revenue-raising legislation and the budget itself.

McGreevey had focused on wooing Republicans, but may have miscalculated by assuming fellow Democrats would stand behind him. The cigarette tax derailment is just one example of that miscalculation. "I haven't voted for a tax increase since I was in the Senate. I want to maintain my current record," said Sen. Nicholas Sacco (D-North Bergen.)

Sacco and at least four other Democrats refused to approve an amendment that would add 10 cents to a 60-cent-a-pack cigarette tax bill that had already received Republican votes in the budget committee. Gov. McGreevey reportedly ruffled a few feathers when he aborted a proposal to raise $33 million by requiring casinos to pay sales tax on the value of free rooms and meals provided to high rollers. Sen. Shirley K. Turner (D-Mercer) said, "I don't know what the reason is for the [10-cent] tobacco tax increase is. If they needed more money, why don't they just keep the tax on room comps in Atlantic City?"

Though the amendment providing a 10-cent increase failed in the Senate on Monday, it could be brought up again later this week.

ABOVE: New Jersey Gov. Jim McGreevey