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Hie Herald and The Lantern

Wednesday, April 16, I960

Pull the Plug

Following a 22 5 percent increase in the fuel adiuslmcnl charge last year, Atlantic Electric is back again, this time with a 30 percent, $86

million rate hike proposal

Unlike all other electric users, the consumer cannot pass along these rate increases The customer and the citizen end up paying in increased costs and taxes whatever higher casts industry, business and government are

charged by the utility.

THIS MUST NOT BE ALLOWED to con-

tinue especially when Jersey Cape consumers

have been conserving energy

We say let the Atlantic City casinos (where

20 percent of the electric service growth is expected i utilize alternate energy sources (including wind generators atop those highrise gambling palaces l and pay their own way lad the utility keep some of the money which is now going foh the gro*s receipts tax and/or let some of this hidden sales tax revenue revert to the consumer instead of

dwindling through the bureaucratic maze

And put a ceiling on the amount of the fuel

adjustment that can be passed along. This should help pull the plug on inflation.

The Land A public hearing to shape the future of Cape Mav City, West Cape May, Cape May Point and Lower Township convenes this evening (Wednesday at 7:30) in Cape May City Hall auditorium Basically, the gathering will bring citizens of the area south of the Cape Way Canal face to face with three levels of government and the position of each as it pertains to which areas should and shouldn’t be served by sanitary sewers. THE FEDERAL POSITION is that virtually all environmentally sensitive areas (wetlands, farmlands and wildlife habitat) and unimproved parcels under 10 ft. elevation should be precluded from sewerage. The state's position is similar but the area seen worthy of preserving is smaller. The MUA's contention is that all of Cape May City, Cape May Point and about half of West Cape May should be sewered and thus open for development. Open land is the best investment .a community can have; not only for environmental reasons, but because unimproved land requires little if any tax-supported government services (such as sewers, for example). All too often when important decisions are left up to local government. Home Rule compromises bring narrow-minded results. The federal viewpoint is visually more encompdssing since it’s basNi upon a wider perspective. GENERALLY, WE SUPPORT the federal position: Development in the Cape May Region should bo kept to a minimum. High population areas of Cape May City and — to a much lesser degree — Cape May Point should be designated for development New development In West Cape May shouldn't be permitted in any area currently being farmed or below 10 ft elevation. In Ixiwer Township south of the canal, the only new development should be in Schellengers landing The beauty and advantage of Country Living at the Shore — which most of the area south of the canal affords — should not be compromised or destroyed.

»*• *■«-«»» i

Editor

Advcrfitmg

Dirt lor Publlthor

(•ws or Arfvorllalnf Information

MADilNIS

Thursday .. . Friday • ) p.m. . . Monday • Noon

William J.

Phona H7-JJ1J for

A Photos

Claastflad Advarflalng . .

analysis

analysis & viewpoint

by New Jersey Tsxpayer Assn. Originally enacted as compensation to municipalities for loss of property taxes, public utilit) taxes have become, in effect, a 12 to 13 per cent sales tax on the gross receipts from sales of electricity and gas Due to skyrocketing energy costs in the last decade, the yie|? from the taxes had fhore than tripled, from 1140 million in 1970 to $426 million in 1079 Although the tax is levied on the utility companies, the cost is passed through to consumers on their utility bills. ALLOCATION OF the taxes is based on each municipality’s proportional amount of utility company property. All S67 municipalities receive some revenue, but due to increased reliance for energy on large generating facilities, usually located in sparsely populated areas, a disproportionate amount of the distribution goes to a few small municipalities whjch, as a result, enjoy minimal or no local property tax rates, In turn, urban centers subject to

viewpoint

budgetary problems receive a relatively smaller share of the distribution relative to their population. Despite the appareht inequities, the state Supreme Court recently ruled that the existing utility tax distribution was legal on the basis that distribution of funds is a contittutional function of the Legislature UNDER THE NEW redistribution laws recently signed by the governor, limitations are placed on the annual allocation of the utility tax revenues to certain municipalities. The major iimTtatiorr is a $700 per captia ceiling on apportionment. This affects only four towns ■» Lower AllowayS Creek Township in Salem County, Holland Township in Hunterdon County. Blairstown Township in Warren County, and Teterboro Borough in Bergen County.

In addition, 86 municipalities are limited to 50 per cent of their share in the growth of the tax revenues because they have municipal purpose tax rates of .10 cents per $100 or less for the three preceeding years. TOTAL TAX revenue for, redistribtuion as a result of the limitations is estimated to be $15 million for 1980. To this amount will be added $12 million from the state's General Fund to provide a total "Municipal Purpose Tax Assistance Fund" of $27 million. This amount will then be distributed among 135 qualifying municipalities and another 200 participating municipalities. The^ first category, qualifying municipalities, are municipalities having municipal purposes equalized tax rates above the state municipal purposes equalized tax rate and a municipal equalized valuation below 90 per cent

of the state equalized valuation per capita. These places will share the bulk of aid, $23 million. OVERALL. THE big ainers in estimated aditional funds in 1980 will be the large-cities. Newark ($3.8 million), Jersey City ($2.9 million), Paterson ($2.0 million), Trenton ($1.2 million), Camden ($1.2 million) and Elizabeth ($.7 million). Expected to lose the most revenue in 1980 are Lower Alloways Creek Township ($9-8. million), Holland Township ($1.1 million) and Blairstown Township ($1.1 millidn). \ There are some who consider this new redistribution of utility tax revenues to be tax reform. However, unless the growth of the taxes is in some way limited, in view of escalating energy prices, it is doubtful that those who really pay the taxes, the consumers, would agree on this judgment of reform, observes NJTA. N.J. Taxpayer Assn. Is a non-partislan research and educational gro^up headquartered In Trenton.

The Hidden Sales Tax

By Cary Edwards In these days of ever-rising energy costs, there is no more "gross" a tax than the 7.5 percent that is quietly tacked onto the gas and electric bills of every household, every business and every institution in New Jersey. It is aptly named the Gross Receipts Tax. In 1973 it raised $193 million and by 1983 it will raise over $650 million — a 330 percent tax increase on gas and electric bills, making it the third largest tax in New Jersey, Our state sales tax is only five percent — and is not applied to such essentials as food and clothing. But on two of the most essential commodities in the northern hemisphere — light and heat — we are paying a hidden 7.5 percent sales tax. It does not show as an item on our energy bills, but rest assured we pay it, even on the infamous "fuel adjustment" charge. UNTIL VERY RECENTLY, 100 percent of the receipts from this tax were paid to all the municipalities in New Jersey based on the value of utility plants and facilities in that host municipality. Recently Governor Byrne signed legislation enabling the state to collect that money and redistribute less than 100 percent of it to the host municipalities, by putting a ceiling on the municipal share and creating a surplus that will be divided up among certain select municipalities. Thus, the host municipalities still are paid what they have been receiving while a part qf the growth due to inflation which I call a "windfall" to certain municipalities like Lower Alloway Creek, is spread out across the state THIS SOUNDS FAIR and equitable — at first glance. But in all the bluster and excitement of taking away "windfall" gross receipts taxes, the legislature and the governor forgot — intentionally — the most important and most needy of all entities in the tax game: the consumer, who is and will continue to be paying higher and higher prices for heat and lights and who continues to pay that unconscionable 7.5 percent tax on top of it. Why should anyone pay such a high tax for an absolute necessity*’ During the Feb. 11 Assembly session, I introduced a bill (A-1072) that would have gradually reduced the tax on energy to less than five percent over a period of years, without reducing the revenues paid to all municipalities — with the sole exceptiqp of Lower Alloways Creek. On Feb. 28 when the governor and majority party presented their bills, the Assembly voted down my amendment. The governor and legislature, using my plan, could have used inflation to benefit the vast majority of state residents, for a change But they chose not to.

THE VERY FOUNDATION of my tax reduction formula is inflation through the constantly rising cost of and

demand for energy.

What A1072 and my proposed amendments to the Administration bills would have done, very simple, is take half of each year's surplus in gross receipts tax revenues and plow it back into the tax rate, reducing the fate by a few tenths of a percent each year. Within five to eight years, depending on the growth of utility revenues, the gross receipts tax rate would shrink from 7.5 percent to about five percent or a little less when the effect of the formula then would taper off. THE MUNICIPALITIES in New Jersey, meanwhile, would not lose a nickel, and, in fact, would continue for five to eight years to receive more revenue to help hold property taxes in line, except of course for Lower Alloways Creek which would be allowed in 1980 to keep only 50 percent of what it has been collecting. Other municipalities would be limited in the future to $700 per capita — which is more than any now get. Lower Alloways Creek, for instance, is currently raking in $5,330 per capita and can't find enough ways to spend all that money. A1072 and/or- my amendments to the administration bills also would have taken about 35 percent of what Lower Alloways Creek will collect in 1981 using the new ceilings and spread it out to both Salem County and to adjacent Cumberland County — areas which both share the risk and problems from the nuclear plants located in Lower Alloways Creek. MUNICIPALTIES MUST continue to be compensated for the value of land and facilities occupied by utilities within their borders to help keep property taxes down, and also for the potential risk to life, limb and property posed especially by nuclear plants. Thus, I did not nor do I propose eliminating the gross receipts tax altogether. But the tax is too high and it is unfair and irresponsible for the governor and legislature

to keep it that high.

The essence and proof of a free society is taxation. It is the never ending job of government at all levels to assure as best it is able that the forms of taxation are eqv'table distributed evenly and fairly across all segments of society and that the total of all taxation is not excessive. The present "gross Recepits Tax Rate” is a hidden, excessive, unfair tax on an absolutely necessary commodity for survival — heat and lights — and must be

appropriately adjusted.

Aatemblyman W. Cary Edwards Jr. (R-Bergen) has served as an elected municipal official and municipal attorney. p

the SOVEREIGN STATE ol AFFAIRS

BOYD