Proposed Bill Hopes to Spur Lending to UEZ Businesses
By Jon Whiten • Aug 17th, 2010 • Category: Blog, News, Politics
Under a bill soon to be introduced in Trenton, lenders that make direct loans to businesses in New Jersey’s Urban Enterprise Zones (UEZ) would not be taxed on interest earned on those loans.
The bill’s sponsor, Hudson County Assemblyman Ruben Ramos, says the proposal is aimed at combating the “credit crunch” many small businesses are facing during the economic downturn. There are 32 UEZ zones in 37 municipalities across the state, including Jersey City. Under the program, which itself faces an uncertain future under Gov. Chris Christie, businesses are allowed to charge a 3.5 percent sales tax, rather than the usual 7 percent, to attract customers and spur development in targeted, mostly urban, areas.
“I know that businesses in Urban Enterprise Zones, especially those in my district where we have four, have been hit particularly hard by the economy,” says Ramos, who plans on introducing the legislation the next time the Assembly is in session. “This is a great incentive to get banks lending to businesses in economically depressed areas until the economy picks up on its own again.”
The bill permits a lender that is subject to the corporation business tax to deduct from its net income the amount of net interest received on loan repayments from a qualified UEZ business. Additionally, a lender would be permitted to deduct from its gross income an amount equal to the net interest received on the loan repayment. Both deductions would be valid for five years.
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Jon Whiten is the founding editor of the Jersey City Independent; he now works for a public-policy nonprofit in Trenton.
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