A nightmare. A punishment. Business group leaders pound Murphy over new business tax

A nightmare.

Fears that have come true.

A punishment.

The business community wasted little time voicing its opinion about Gov. Phil Murphy’s proposed Fiscal Year 2025 budget that he unveiled Tuesday afternoon in Trenton.

While Murphy said his proposed budget — which he will work with the Legislature to finalize and implement — will make New Jersey a better (and more affordable) place to live, the business community said it will do the opposite for it.

The biggest complaint was in regard to his proposed Corporate Transit Fee — a 2.5% surcharge on the state’s biggest companies — that essentially mimics what the recently sunset Corporate Business Tax surcharge did.

The temporary surcharge the governor repeatedly has said he would not continue, saying, “A deal is a deal.”

On Tuesday, dare we say, the governor announced a new deal.

Michele Siekerka, the CEO of the New Jersey Business & Industry Association, was incensed that the governor would go back on his word.

“That Gov. Murphy would recommit to a new business tax at a time of a multibillion-dollar surplus to fund NJ Transit when there is no correlation between those impacted corps and public transportation — which he acknowledges himself — is nothing short of a punitive action against our largest job providers,” she said. “It is a punishment they do not deserve.”

Tom Bracken, the CEO of the New Jersey Chamber of Commerce, agreed.

“I hope this is a nightmare that isn’t true,” he said. “We have been preaching that New Jersey needs to become more affordable, more business-friendly and more competitive. Now, we are shocked that there is talk of reinstituting higher taxes on businesses less than three months after the 2.5% Corporation Business Tax surcharge expired.

“If the fiscal 2025 state budget is passed, as proposed, and the surcharge is reinstated, New Jersey will quickly go from being the CNBC ‘Most Improved State for Doing Business’ to being one where companies flee — and stay away.”

Christina Renna, the CEO of the Chamber of Commerce Southern New Jersey, said her group has raised numerous concerns about the enormous total spend of Murphy’s budget proposals over the years.

“Specifically, we feared that, in order to maintain this level of year-over-year growth in spending — a more than 50% increase since 2018 — New Jersey would inevitably have to raise taxes on its already overburdened residents and businesses, unless considerable cuts were made or new, reliable, long-term revenue sources were identified.

“Today, it seems our fears have come true in a way that disproportionately impacts South Jersey companies.”

Tony Russo, the president of the Commerce and Industry Association of New Jersey, urged the governor and the Legislature to withdraw this proposal and instead allocate federal funds to such a purpose.

“New Jersey received billions of dollars in recent years through the various federal laws that were enacted, including the Infrastructure Act, which could be used to improve our public transportation system,” he said. “Our businesses already pay some of the highest taxes and fees in the nation, so adding to that burden will only deter new and continued investment in our state.

“More needs to be done to help our businesses grow and increase the number of private-sector jobs, which will lead to more revenue for New Jersey. Reducing taxes and fees on the business community will assist in accomplishing that goal.”

Other states are trying that.

Siekerka noted that Pennsylvania is lowering its top CBT rate to 4.9% — and funding its transportation system without using corporate taxes.

And, while that is welcoming to businesses, Bracken said the governor’s actions are doing the opposite.

“The state will have deliberately chosen to send a message that New Jersey is an unpredictable place to set up shop — and that there’s a possibility promises made to executives and business owners might not be honored. It is that plain and simple — and extremely disappointing,” he said. “There is a lot of talk in the proposed budget about program expansion to help New Jersey citizens. That could only happen long-term through business expansion — and enhanced employer community support.

“This is certainly a nightmare scenario for New Jersey.”

Siekerka seconded the notion — and noted that the way the tax was announced is bad policy.

“The governor’s sudden reversal on the surtax, with no forewarning, is simply bad form,” she said. “Businesses require the ability to plan to be successful. When you make promises that drive investment, and then renege on them a few weeks later, it goes well beyond creating terrible policy.

“It either reaffirms, with startling conviction, New Jersey’s anti-business climate, messaging to businesses here and across the nation that they can place no trust in their state leaders. Or it shows the state really is a fiscal mess, which was only masked by federal dollars indirectly funding shortfalls in the short term.”

Eileen Kean, state director for the National Federation of Independent Businesses, said New Jersey’s small business owners are disappointed with the budget proposal, too.Even the new CTF will impact them, Kean said.“This tax hike will have a cascading effect, as such a significant new tax impacts all small businesses and consumers even if it is not directly imposed,” Kean said. “With the heightened concerns of small business owners with New Jersey’s difficult economic climate and high tax burden, the governor and state lawmakers should put a pause on new tax hikes that will only harm Main Street businesses and job creation.“What they should do is take an honest look at ballooning state government spending. The previous administration’s last budget in 2017 was $35 billion, and the budget proposed this afternoon is $55.4 billion. Any small business owner could tell you this is irresponsible and unsustainable.”