An addition to the sin tax. As your already aware, sports betting is now legal in the state of New Jersey. And with it comes a new addition to the so-called sin tax. Indeed, sports betting and e-cigarettes are in the same tax category now. Although, The Charitable Trusts (The Pew), predicts only a modest addition to the tax revenue. It’s still worth knowing that more income is coming into the state chest!
The potential extra income from this type of Sin tax has been historically proven to fluctuate due to the ever-changing regulations and social trends. Now, this causes a slight problem for decision makers that can’t lean too heavily on the sin tax when drafting the state budget.
“Given the unpredictability of sin tax revenue, states should be cautious about extending what may be effective short-term fall-backs into long-term solutions”, The Pew report stated.
So what are the numbers looking like?
New Jersey is one of the few states that includes the sin tax when planning the budget. As reports show, the garden state collects roughly 5%. The comes from the state lottery, gambling, drinking, and smoking under the sin tax. That’s almost 50% higher than the national average of 2.3%.
“As revenue continues to decline. States will face imbalances between diminishing taxes and steady or growing expenditures”. The Pew’s reports pointed out.
It’s worth knowing that in addition to the sin tax, any person that place a sports bet need to pay a 9.75% tax. What’s more is that the law states that if the bets are online, the tax goes up to 14.25%.
According to the Murphy administrations projections, $12 million will find its way to the government’s tax chest. But it’s still too early to say if the new addition will boost the revenue significantly. Once again only time will tell!