New Jersey Kills Gross Receipts Taxes

Fortnightly Magazine - September 1 1997
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The New Jersey Legislature has passed a utility tax reform package eliminating the gross receipts and franchise tax for electric, natural gas and telephone utilities.

The new tax system will levy a 6-percent tax on electric and gas sales, a 9-percent tax on companies selling the electric and gas and a transitional tax to be phased-out after five years. The package guarantees that municipalities will receive $745 million in aid in 1998 to make up for the lost revenues. That annual amount will climb to $755 million in 2002.

Under the old tax structure, utilities had paid the gross receipts and franchise tax in exchange for a property tax exemption for equipment installed in municipalities. The state collected and distributed the revenue to municipalities based on utility inventory within their borders. It was the largest revenue source for municipalities.

The New York State Energy Association, a trade association for the eight major electric and gas utilities in the state, has pointed to New Jersey's gross receipts and franchise tax repeal as evidence for passage of similar legislation.


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