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TRENTON, N.J. -- Just in time for Halloween, sales tax is being removed from certain sweets, such as Twix bars and Tootsie Rolls.
New rules bringing New Jersey's sales taxes in line with other states go into effect Saturday, said Tom Vincz, spokesman for the New Jersey Department of the Treasury. The changes are designed to smooth operations for businesses with multistate trade so that, say, a single-serving bottle of iced tea or dandruff shampoo is taxed similarly in several states. New Jersey will join about 20 other states that have signed onto the Streamlined Sales and Use Tax Agreement.
Among the changes, the Department of Taxation's officials say, is one in which sweets made with flour -- such as licorice, KitKats and Nestle's Crunch -- will be exempt from tax, while those prepared without flour -- Hershey's chocolate bars, for example -- remains subject to New Jersey's 6 percent sales tax.
Traditionally, food with nutritional value has been tax exempt, while other things that are considered luxuries -- chocolate, tobacco, soft drinks and alcoholic beverages -- are taxed. But each state makes its own rules, so in some places a Twix bar is considered a tax-free cookie, while in other places it was considered a taxable candy.
Months of debate among the dozens of state and industry leaders in New Jersey and elsewhere finally determined that any sweet containing flour would be considered a tax-exempt food, state tax officials said.
Soft drinks remain taxable although beverages that are more than 50 percent fruit juice are untaxed. Beverages made with soy, rice or milk, and iced tea without sweeteners is also tax-exempt.
Foods that consumers typically take home to prepare for themselves remain tax free, while ready-to-eat food--hot take-out at the supermarket or anything sold with utensils is subject to tax.
Among other tax changes: All grooming products will be subject to tax. Previously, items that claimed to contain medicine, such as certain dandruff shampoos, were tax exempt. The state has also offered an amnesty to retailers in New Jersey who have failed to tax their mail-order sales, Vincz said. From Oct. 1 through June 30, 2006, retailers who have shirked this responsibility may begin collecting and remitting those taxes without being penalized for previous inaction. According to Vincz, this could mean $40 million in new revenue to the state.