This Tax Is Slamming NJ, Lawmakers Say. Will Murphy Do Something?

There's a tax that's slamming New Jersey's economy this summer, lawmakers say. Now they're waiting for Gov. Phil Murphy to fix it.

Indeed, Democrats and Republicans just unanimously passed legislation that would fix it. But the governor....well....

Legislation that would relieve the costly consequences of a tax on short-term rentals that was approved by Murphy last year continues to sit on the governor’s desk, lawmakers say, while evidence of the tax’s damage to the Jersey Shore economy mounts.

The law they're pointing to is an Airbnb tax signed by Murphy last October. The law compels owners who put their homes, or rooms, up for short-term rent to collect the state's 6.625 sales tax and 5 percent occupancy tax. Local towns also can also charge taxes of up to 3 percent.

The law (A-1753) imposes the same taxes and fees that hotels and motels currently must pay to the state on "transient accommodations," or residences used as temporary lodging.

Real estate officials say their Jersey Shore short-term rental occupancy rates are down as much as 30 percent because of the tax. The law includes a nearly 12-percent surcharge on short-term rentals lasting less than 90 days, they say.

Lawmakers say they've been waiting for Murphy to take action before the summer's over, but he hasn't, and he just returned from a long vacation. The Murphy administration declined to comment on pending legislation.

Sen. Jim Holzapfel and Assemblymen Greg McGuckin and Dave Wolfe, all R-Ocean, say they are frustrated by the delay and they're calling on the Murphy administration to enact the bill before it’s too late for the summer season.

“The legislature has done our job to rework portions of the tax that are unfair to Shore homeowners,” said Holzapfel. “The governor’s inaction is troubling and irresponsible. While he vacations at his villa in Italy, rentals are going unoccupied and business is feeling the impact. We need this bill signed now.”

This NJTV video speaks to the impact:

The new measure (S-3158/A-4814) was passed unanimously by the Senate and Assembly and has been on the governor’s desk since June 27. It exempts homeowners who rent directly to vacationers from last year’s so-called Airbnb tax which extended the 6.625 percent sales tax and the 5 percent hotel and motel occupancy fee to private rentals of less than 90 days.

“We were worried about what this tax would do to the Shore communities, and the reality is as bad as we feared or worse,” said McGuckin. “Unheard of numbers of rental units are sitting vacant in prime vacation weeks, and owners are being forced to make deep discounts to fill openings. It’s not just homeowners who are feeling the pinch. The seasonal businesses that rely on the summer months to get them through the year are paying the price, too.”

“There’s still a few weeks of the vacation season remaining,” said Wolfe. “Summer tourism is too important to New Jersey’s economy for the governor to continue to ignore this important piece of legislation. He needs to step up and sign the bill now.”