Retail group: Escheat law could cost N.J. $94M in lost sales tax revenue
The loss of gift card sales from New Jersey, combined with the state's unclaimed property law, could cost state coffers up to $94 million per year in sales tax revenues, according to an analysis released today.
Consumers using gift cards often spend amounts above a card's face value, and as companies like American Express pull gift cards from shops in the state, the resulting decrease in sales will result in a drop in the state's sales and use tax revenue collections, according to the analysis by financial services consulting firm First Annapolis, and released by the New Jersey Retail Merchants Association and the Retail Gift Card Association.
"This law comes at simply too great of a cost for businesses to comply. Now, it appears that this law may also come at too great of a cost for the state to implement," said John Holub, president of the New Jersey Retail Merchants Association, in a statement. "This analysis clearly shows that retailers and consumers are not the only ones being negatively impacted by this law."
Last week, American Express was joined by InComm and Blackhawk Network in halting the sale of gift cards in New Jersey, rather than surrendering to the state unused portions of card balances after two years.