Business Personal Property Tax Exemption A-3335 (Assembly Budget Committee Desk Letter)
Thursday, May 12, 2005

MEMORANDUM

TO: Members of the Assembly Budget Committee

FROM: Kathleen A. Davis, Executive Vice President & COO

RE: A-3335 (Vas, Cryan)

DATE: May 12, 2005

The Chamber of Commerce Southern New Jersey strongly supports A-3335 (Vas, Cryan), which clarifies the test for determining when personal property is not a taxable fixture attached to real property.

This legislation is absolutely necessary in rectifying a discrepancy that was created in the New Jersey Supreme Court’s interpretation of the "Business Retention Act." In the case, General Motors Corp. v. City of Linden, 150 N.J. 522 (1997), the Court asserted the position that personal property must first meet the material-injury test when determining when it is a taxable fixture. However, this was not the legislature’s original intent. The Business Retention Act states that personal property could meet one of two tests in determining whether equipment is taxable. Under the 1996 law, machinery and equipment could meet either the material-injury test (test a) or the business-use test (test b), to determine whether the property was a taxable fixture attached to real property. Therefore, A-3335 would simply clarify the court’s misinterpretation of the bill’s intent and allow business machinery and equipment to be exempt from local property taxes.

The Chamber firmly believes that this tax exemption for manufacturers, utilities and other businesses is essential for those who are currently operating or wish to operate in New Jersey. By clarifying that the material-injury test is not the only method for determining tax exemption for business equipment, it will maintain the legislature’s original intent to give businesses an incentive to stay in our state and invest in our economy.

We urge you to vote yes on A-3335. Thank you for the opportunity to express our position on this important measure.