What do laser tag, bowling, online gambling and vapes have in common?
They are on the list of items Gov. Phil Murphy says should be taxed or taxed at a higher rate to help generate $1.2 billion in revenue for his proposed $58.1 billion state budget.
The Democratic governor didn’t call for raising any broad and sweeping tax hikes that would affect every household, such as on the sales or income tax. But business leaders and even some fellow Democrats in the state Legislature are questioning whether tapping these new sources of revenue is worth it.
The list of newly taxable activities in Murphy’s budget proposal is quite extensive. According to budget documents, it also includes baseball batting cages, basketball and tennis courts (when the patron participates), pool halls and bungee jumping.
And there’s more: fishing piers, greens fees at golf courses and driving ranges, health and fitness clubs, miniature golf, parachute jumping, Paintball; skating rinks; skeet shooting ranges; skiing lift tickets, speedways, swimming pools and water slides.
Taxing for the first time family-fun services like laser tag, go cart racing and bowling sends “the wrong message at the wrong time with everything else is going on” — including escalating egg prices and the uncertainty about losing federal aid under the Trump administration, said state Assembly Majority Leader Lou Greenwald, D-Camden.
“Everyone who is a parent has hosted birthday parties at these places, and working families don’t deserve that,” he said.
“Given what we have done to reduce property taxes, I don’t want to distort that message by taxing laser tag and bowling,” Greenwald said.
The budget proposal contains $4.3 billion to fund a combination of existing and new property-tax reduction programs in the coming year.
Greenwald called Murphy’s proposal a “responsible” plan.
“But this is our budget now,” he said, noting that the Legislature gets to adjust the spending plan. “We have never taken a budget and approved it in its exact form.”
The list of taxes and fee changes in the proposed budget include:
Brand-new taxes: The state anticipates collecting $277 million by taxing go-cart racing, laser tag, bowling, interior design services, horse training, vehicle trade-ins, some comped meals, tickets, and hotel rooms, digital services and second-hand airplane sales. Murphy also wants to end a sales tax exemption and the $20,000 sales tax cap on boats.
Cigarettes, alcohol, and vapes: A tax hike of 30 cents, up from 10 cents, on vaping liquid would net the state $10 million. A 10% tax increase on alcoholic beverages would bring $18.5 million. The tax on a pack of cigarettes would climb 30 cents to $3.00, generating $41 million.
Luxury homes: Homes and other property with a pricetag between $1 million and $2 million would be assessed a 2% tax, up from 1%, and 3% percent tax on property that sells above $2 million. These increases are expected to generate $317 million in state revenue.
Internet gaming and sports betting: Casinos now pay a 13% tax on on revenues earned through sports betting and 15% on internet gaming proceeds. Murphy proposes raising both to 25%. The state expects to gain $402.4 million.
Taxes on marijuana license holders and “intoxicating” hemp products: License holders now pay $2.50 per ounce of cannabis under the Social Equity Excise Fee, but Murphy wants to raise it to $15 per ounce. A new $30 per ounce tax would also be levied on the sale of intoxicating hemp products. This would generate about $70 million.
Truck traffic: There’s a $2 truck traffic excise fee on warehouses, raising an estimated $20 million while also “mitigating the impact on new warehouse development.”
Guns and ammunition taxes and fees: Details were not released but the budget anticipates $8 million would be raised through a new excise tax on guns and ammunition, as well as higher firearm fees.
Drones: A new excise tax on unmanned aircrft systems, or drones would raise $5 million.
The proposed budget also eliminates some baby supply items from the 6.625% sales tax. They include cribs, strollers and nursing bottles.
State Sen. John Burzichelli, D-Gloucester, said he was leery of the tax hikes Murphy proposed, though he noted this could simply be the start of negotiations.
“The process is just beginning,” said Burzichelli, who serves on the Senate Budget and Appropriations Committee. “There’s not an appetite in my mind — I can’t speak for everyone — for new taxes. There’s just enough stress around everything that new taxes are hard to sell to anybody.”
Murphy and leaders of the Democratic-controlled Legislature will must negotiate a final budget by June 30, the end of this fiscal year. There will be also public hearings on Murphy’s plans in the coming months.
One legislative source said increasing taxes on someone “going bowling while having a beer” could be a tough bridge for lawmakers to cross in a big election year, with voters selecting a new governor and all 80 seats in the Assembly.
This is also a difficult budget year, with the budget facing at least a $1.2 billion structural deficit and the threat of big federal funding cuts from Washington. The “reality is we’re gonna need some of that revenue,” the source said, adding that the goal is to “target” the increasing.
Burzichelli specifically called out the proposed increase on online gaming, which would directly affect Atlantic City and the South Jersey region he represents. He said the relatively lower tax rate originally established on online gaming was on purpose.
“Volume brings money,” Burzichelli said. “If you tax more, do you have the same money? I don’t think it’s wise to do it.”
Mark Giannantonio, president of the Casino Association of New Jersey, warned raising taxes on sports betting and online gaming kicks the industry while it’s still hasn’t recovered from the pandemic.
“Recent gaming revenue reports show that six of nine casinos have not returned to pre-pandemic gaming levels,” Giannantonio said in a statement.
If passed, he said, this proposal “will have significant adverse consequences for brick-and-mortar casinos. The partnerships between online gaming companies and Atlantic City casinos have established significant cross-marketing and promotions, such as complimentary rooms, entertainment, and promotional gaming credits for use at the properties to help bring more visitors to Atlantic City.”
“More importantly, the financial benefits of these partnerships provide additional resources that are reinvested in our brick-and-mortar Atlantic City properties, support our operations, and augment our ability to compete in the regional marketplace more effectively,” Giannantonio said.
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Susan K. Livio may be reached at slivio@njadvancemedia.com. Follow her on X @SusanKLivio and Bluesky at susanklivio.bsky.social.
Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on X at @johnsb01.