Surprise sales tax hike suggested by top NJ Democrat: This is what you’d pay

The chairman of the New Jersey Senate Budget Committee has floated the idea of increasing the state sales tax.

During budget hearings on Tuesday, Sen. Paul Sarlo suggested the increase as an alternative to Gov. Phil Murphy's billion-dollar tax hike on New Jersey businesses.

Business groups, including the New Jersey Business and Industry Association and the New Jersey State Chamber of Commerce, have been intensely lobbying lawmakers to ditch Murphy's business tax hike.

Sarlo is the first Democrat to propose a viable alternative.

During budget hearings in Trenton Tuesday, Sarlo suggested raising the sales tax from the current 6.625% to 7% would be "more stable than the corporation business tax on the higher earning income companies, which could vary from year to year."

Like Murphy's business tax hike, revenues from the sales tax increase would be dedicated to New Jersey Transit.

Murphy has suggested he is open to raising the sales tax but did not include it in his $59.9 billion state budget proposal.

The sales tax was reduced in 2016 as part of a deal between Democratic legislative leaders and then-Gov. Chris Christie.

In exchange for agreeing to raise the gas tax by 23 cents per gallon to fund road and bridge repair, the sales tax was reduced, and the estate tax was eliminated in New Jersey.

If the sales tax is increased back to 7%, it could cost New Jersey families an additional $500 per year or more.