From gym to limo, N.J.'s 7% sales tax expands tomorrow
Sep. 30, 2006 (AP)

TRENTON - Michael Briehler wanted to make a point when telling his health-club customers they'll have to pay more as of tomorrow, thanks to a new state sales tax that affects things ranging from tattoos to shopping clubs.

So Briehler sent them a photograph of children selling lemonade on a front lawn, with the dejected tykes warning customers they would have to pay sales tax on their drinks.

Front-yard lemonade hawked by children remains out of reach of the New Jersey tax man, but Briehler wanted to make a point to patrons of his Ewing club.

"Funds are getting tighter," said Briehler, president of PEAC Health & Fitness. "It hurts healthy lifestyles."

As part of a sales-tax increase approved in July, the state's 7 percent levy will be extended to items such as self-storage, tanning, massages, tattooing, flooring and rug services, landscaping, limousines, shipping and handling, and health- and shopping-club memberships.

Gov. Corzine proposed the increase to help close a projected $4.5 billion budget deficit for this fiscal year, but the increase was opposed by many of Corzine's fellow Democrats, who control the Legislature.

The dispute led to state government's closing for a week after the state missed its constitutional deadline to adopt a budget, leaving it with no means to spend money. Casinos, which require state monitoring to operate, had to close for three days.

The impasse broke only after Corzine agreed to let voters decide this fall whether to dedicate half the money earned by the sales tax to lowering property taxes, which are the highest in the nation. The agreement also calls for asking voters in 2007 to dedicate the rest of the money raised by the increase to property-tax relief, as long as the state budget is in good enough shape.

"Gov. Corzine took no joy in being forced to cut spending by over $2.5 billion or proposing a 1 percent sales tax increase," spokesman Anthony Coley said. "When faced with a $4.5 billion budget deficit, however, he didn't have much choice."

The sales-tax increase is expected to raise $1.2 billion annually. The expansions that take effect tomorrow are expected to raise $332 million of that amount.

Briehler said memberships at his health club near I-95 cost from $30 to $65 per month, so the newly implemented sales tax will cost his customers up to $55 per year. He said the hike, along with increased property taxes and fuel prices, would likely force some to drop their memberships.

Mike Lackland, owner of Lackland Self Storage, which has 21 New Jersey sites, said about a dozen people vacated storage units to avoid paying sales tax.

Lackland charges rents ranging from $74 to $415 per month, so some customers will have to pay $29 more per month, or $348 more per year.

"It's a tough one for the industry," Lackland said. "It's just unfortunate that the people of New Jersey have this additional burden."

The New Jersey Self Storage Association and the Limousine Association of New Jersey have each filed lawsuits in federal court in Newark alleging the new tax violates federal constitutional protections.

"The state has selected a very narrow sector of commercial real property and applied a sales tax to it," said Chris McGrath, self-storage association president.

The tax expansions are the last to take effect of the $1.6 billion in new taxes included in the budget approved in July.

What Will Be Taxed?

As of tomorrow, the state's 7 percent sales tax will be expanded to include:

Downloaded music and video

Shipping and handling charges

Flooring and carpeting installation

Storage space

Tanning, massage and tattooing

Data processing

Limousines

Health, shopping and other club membership fees

Parking garages and lots

Non-clothing cleaning services

Landscaping

Magazines and periodicals

Investigation and security services, such as security alarms and armored cars