Rain Tax
Have you heard of Rain Tax before?
Rain Tax, also known as a stormwater fee, is a charge imposed on real estate owners for pollution in storm water drainage from impervious surface runoff. This system was first introduced in Germany in the 1990s to impose a tax that is proportional to impervious areas, such as concrete or asphalt, that does not absorb water.
Recently, New Jersey Gov. Phil Murphy signed 19 bills into law, including the so-called “Rain Tax." A “Rain Tax” bill is said to be passed by the state legislature and Republicans. The bill would allow municipalities to create utilities that can collect fees from homeowners and business owners that have large paved surfaces, like driveways and parking lots. During storms, rainwater mixes with pollutants on surfaces before running into sewers and drains. The money from collected from the “rain tax” can be used for upgrades to reduce the impact on the environment.
Opponents call it the “rain tax,” while supporters call it a "flood defense.” Supporters believe that the law will help restore the health of lakes and bays and bring relief to flood-prone communities. On the other hand, opponents think that the law is too vague and believe that it could allow for uneven enforcement on a business community that is already overtaxed.
Although the government does not impose a wide-ranging tax on communities, they allow towns and counties to target properties where stormwater easily washes off, since this is the leading cause of local flooding and high levels of pollution in the state's waterways. Large malls and office parks with massive parking lots are most likely affected. However, the bill S-1073 does not directly impose any fees on property owners. The bill allows municipalities and counties to create their own local stormwater utility that could then charge property owners a fee based on "a fair and equitable approximation" of how much runoff is generated from their property. The utility could then use the funds generated by the fees for reinforcing or replacing pipes or creating green infrastructure like rain gardens and tree planting to absorb water that would otherwise carry trash, bacteria and heavy metals.
How bad is the problem?
New Jersey's rivers, streams and bays are in better shape than they were two generations ago, when the federal Clean Water Act was in its infancy. One of the biggest problems is that the sewage from dozens of communities in North and Central Jersey routinely mix with stormwater and is poured into waterways during heavy rainstorms from antiquated combined sewage outfalls. In addition, flooding is a chronic problem in many areas of New Jersey from the Shore to the Passaic River Basin. According to the Insurance Information Institute, the state had the fifth most flood insurance policy in the United State in 2017, with 226,588. Furthermore, climate change continues to present problems for New Jersey's aging infrastructure. The state was pummeled with more precipitation in 2018 than in any other year since 1895.
Who is going to pay?
In order to be charged a rain tax, a property owner has to reside in a town or county that establishes a stormwater utility. An assistant executive director of the League, Mike Cerra said, "You'll see interest from major urban areas where flooding and runoff are facts of life.” However, the law only exempts farms and commercial gardens from fees, although agriculture runoff from fields generates significant pollution. This means that every other property owner could be subjected to a fee, including single-family homeowners, condo complexes and other residential properties. But the law gives towns and counties great discretion to determine who pays and how much. The New Jersey Business & Industry Association says the law could affect anyone, especially some of the largest property taxpayers in a community. A vice president for the business association and former Department of Environmental Protection assistant commissioner Ray Cantor said, "This law will be extremely difficult to administer, it will require an analysis of each property in a town, credits for existing facilities, and credits for how well you maintain a facility. There is no certainty on how much can be collected and no stated appeals process."
Where will the money go?
The vast majority, 90 percent of funds, can be used only on local stormwater systems for upgrades such as replacing pipes, maintaining catch basins or creating rain gardens to absorb water. The utility is required to send 5 percent of its fees, but no more than $50,000, to the Clean Storm water and Flood Reduction Fund. It can only be used for stormwater management such as water quality monitoring and projects to reduce water pollution. The law permits counties and municipalities to divert up to 5 percent of the annual costs of operation of the stormwater utility to the local budget.
Edited by: Tong Tong Chan
Sources:
https://www.northjersey.com/story/news/new-jersey/2019/03/21/nj-taxes-7-things-new-jersey-residents-paying-more/3178417002/
https://en.wikipedia.org/wiki/Rain_tax
https://newyork.cbslocal.com/2019/02/04/rain-tax-likely-to-become-reality-in-new-jersey/
https://www.foxnews.com/politics/new-jersey-residents-may-be-hit-with-rain-tax
https://savejersey.com/2019/03/governor-phil-murphy-new-jersey-rain-tax/
New Jersey is no stranger to taxes; it is one of the most taxed states in the United States. Of the states impose a sales tax, New Jersey now ranks as the 8th highest. As for income tax, New Jersey is the 6th highest, and for property taxes, it is the highest in the nation. And now, New Jersey is even imposing a “rain tax.” This new imposed tax situation is being watched with keen interest among the U.S.
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