Bill Text: NJ A2607 | 2010-2011 | Regular Session | Introduced
Bill Title: Provides sales and use tax exemption for certain packaging equipment.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2010-06-30 - Reviewed by the Sales Tax Review Commission Recommend to not enact [A2607 Detail]
Download: New_Jersey-2010-A2607-Introduced.html
Sponsored by:
Assemblyman ANTHONY M. BUCCO
District 25 (Morris)
SYNOPSIS
Provides sales and use tax exemption for certain packaging equipment.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a sales and use tax exemption for certain packaging equipment, amending P.L.1980, c.105.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 25 of P.L.1980, c.105 (C.54:32B-8.13) is amended to read as follows:
25. Receipts from the following are exempt from the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.):
a. Sales of machinery, apparatus or equipment for use or consumption directly and primarily in the production or in the packaging of tangible personal property by manufacturing, processing, assembling or refining;
b. Sales of machinery, apparatus or equipment for use or consumption directly and primarily in the production, generation, transmission or distribution of gas, electricity, refrigeration, steam or water for sale or in the operation of sewerage systems;
c. Sales of telephones, telephone lines, cables, central office equipment or station apparatus, or other machinery, equipment or apparatus, or comparable telegraph equipment to a service provider subject to the jurisdiction of the Board of Public Utilities or the Federal Communications Commission, for use directly and primarily in receiving at destination or initiating, transmitting and switching telephone, telegraph or interactive telecommunications service for sale to the general public;
d. Sales of machinery, apparatus, equipment, building materials, or structures or portions thereof, used directly and primarily for cogeneration in a cogeneration facility. As used in this subsection, "cogeneration facility" means a facility the primary purpose of which is the sequential production of electricity and steam or other forms of useful energy which are used for industrial or commercial heating or cooling purposes and which is designated by the Federal Energy Regulatory Commission, or its successor, as a "qualifying facility" pursuant to the provisions of the "Public Utility Regulatory Policies Act of 1978," Pub.L.95-617. The Director of the Office of Energy in the Department of Environmental Protection, in consultation with the Director of the Division of Taxation, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations establishing technical specifications for eligibility for the exemption provided in this subsection;
e. Sales of machinery, apparatus or equipment, including transponders, earth stations, microwave dishes, transmitters and receivers which have a useful life exceeding one year, other than that used in the construction or operation of towers, to a commercial broadcaster operating under a broadcasting license issued by the Federal Communications Commission or to a provider of cable/satellite television program services who may or may not operate under a broadcasting license issued by the Federal Communications Commission for use or consumption directly and primarily in the production or transmission of radio or television information transmitted, delivered or archived through any medium or method.
The exemptions granted under this section shall not be construed to apply to sales, otherwise taxable, of machinery, equipment or apparatus whose use is incidental to the activities described in subsections a., b., c., d. and e. of this section.
The exemptions granted in this section shall not apply to energy, motor vehicles, or to parts with a useful life of one year or less or tools or supplies used in connection with the machinery, equipment or apparatus described in this section.
(cf: P.L.1997, c.162, s.23)
2. This act shall take effect immediately and apply to sales made on or after the first day of the third month next following the date of enactment.
STATEMENT
This bill provides an exemption from the imposition of the sales and use tax for sales of certain equipment which is used or consumed directly and primarily in the packaging of tangible personal property.
Under current law, sales of machinery, apparatus, or equipment which is used or consumed directly and primarily in the production of tangible personal property by manufacturing, processing, assembling, or refining are generally exempt from taxation. Current regulations stipulate, however, that production, for purposes of the exemption, is limited to those operations "commencing with the introduction of raw materials into a systematic series of manufacturing, processing, assembling, or refining operations, and ceases when the product is in the form in which it will be sold to the ultimate consumer." Production does not include any activities which are distributive in nature, and the exemption, therefore, does not include machinery, apparatus, or equipment which is used to package a final finished product for shipment to the consumer.
The tax treatment of packaging equipment under the current manufacturing equipment exemption which deems that manufacturing ceases prior to packaging, is confusing for manufacturers and their customers, and has placed the State at a competitive disadvantage with surrounding states that exempt or otherwise exclude packaging equipment from taxation. The exemption provided by the bill is intended to remove this disadvantage, and dispel current confusion by ensuring all machinery, apparatus, and equipment is exempt from taxation, regardless of when it used or consumed in the production process.
