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Unemployment tax surcharge halt heads to Christie's desk

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A bill to stop a hike in unemployment insurance taxes is headed to Gov. Chris Christie's desk.

The bipartisan legislation, which would forestall a 10 percent unemployment tax surcharge set to take effect July 1, passed the Assembly unanimously Thursday.

The increase is scheduled as part of a plan to replenish the state's Unemployment Trust Fund, but business groups say increasing the tax now could hurt the state's still-recovering economy.

"The fund is headed toward solvency, so this will maybe slow it down a little bit, but it's not going to stop it from getting to that point," said Laurie Ehlbeck, New Jersey director for the National Federation of Independent Businesses and a member of the state's UI task force.

Ehlbeck said businesses already have been hit with other fees and cost increases, including health insurance rates, so the UI tax increase would have amounted to another significant blow to their bottom lines. She also said letting employers keep the money — estimated at $300 million for the fiscal year — is a better way to help the economy.

"The more money that is in employers' pockets, the more money they can use to either retain the employees they have or to possibly hire new ones," she said.

Alison Littell McHose (R-Sparta), one of the sponsors of the bill in the Assembly, noted that unemployment has been falling in recent months.

"This bill recognizes the need to work with the business community that creates the jobs in New Jersey," she said, in a statement.

Assemblyman Tim Eustace (D-Paramus), meanwhile, said the bill frees companies to focus on job creation.

"Creating a good environment for job creation in New Jersey is a top priority," he said, "and this is an essential ingredient to accomplish that goal."

The bill passed the state Senate unanimously in February.

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