Analysis shows potential revenue loss due to unclaimed property law
TRENTON, N.J., April 11, 2012 /PRNewswire-USNewswire/ -- The New Jersey Retail Merchants Association (NJRMA) and the Retail Gift Card Association (RGCA) released today an analysis estimating the potential annual loss of sales tax revenue as a result of New Jersey's unclaimed property law at $64-94 million.
The analysis, conducted by the financial services consulting firm First Annapolis, focuses on studies that have shown consumers using gift cards often spend an incremental amount beyond the face value of the card. As gift cards exit New Jersey, this incremental spending is eliminated from the market, lowering total retail sales in New Jersey. Any decrease in New Jersey's retail sales would also result in a decrease in the state's sales and use tax revenue.
"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. "This analysis clearly shows that retailers and consumers are not the only ones being negatively impacted by this law."
Last week, American Express, InComm and Blackhawk Network all announced plans to no longer operate in New Jersey, rather than comply with this law that lets the state seize the value of unredeemed gift cards after just two years.
"While our main concern is the negative impact this law will have on retailers and consumers in New Jersey, and we are fearful many more businesses will make the extremely difficult decision to no longer operate in the state, what is also becoming clear is the significant, negative fiscal impact this will have on state revenue," said Rebekka Rea, executive director of the Retail Gift Card Association. "The law was clearly intended to raise revenue for the state, but it may now have the complete opposite effect, and the state will be losing a significant amount of revenue."
The RGCA urges consumers to learn more information about the subject at www.giftcardusersunite.com.
The New Jersey Retail Merchants Association (NJRMA) is a not-for-profit business organization, located in Trenton, the state capital. NJRMA is currently in its 45th year of operation, promoting and protecting the retail industry in New Jersey. NJRMA serves both large and small retailers, from multi-state chains to local independents that cover every possible retail category: apparel, furniture, home improvement, direct sellers, and quick service restaurants, to name just a few. As the voice of the retail industry in New Jersey, NJRMA provides a critical link between retailers and all of local and state government.
The Retail Gift Card Association (RGCA) is a nonprofit association with a mission to create consumer-centered gift card policies and procedures. RGCA membership is open to retailers, restaurants, and travel-and-entertainment merchants whose core part of their business is to sell products or experiences but who also issue and offer closed-loop gift cards. The RGCA is focusing its resources on building positive perceptions of gift card usage, developing a benchmarking program for gift card sales and identifying legislative initiatives. There is useful information on gift card trends, innovations, and issues that are associated with gift cards on the website at http://www.TheRGCA.org.
SOURCE Retail Gift Card Association