In an effort to reduce residents’ tax burden and promote local businesses the city council on Tuesday had an outside firm come in to give a presentation on a shop local program that would provide residents tax credits if they spend their money in local businesses.
“It’s like a CVS or Pathmark card,” explained Carmine Defalco, president of FinCredit. Defalco said interested residents will be issued a card that will read “Shop Paterson” or something similar. The card is not free, the city must purchase them for residents, at $1 per card. And it is the city that also has to mail them out to residents – a stamp and processing cost.
“Cards need to be purchased,” said Defalco, after Kenneth Morris, councilman at-large, asked him who pays for the cards. “So the city is responsible for purchasing the cards?” asked Morris.
Local businesses can choose to join the program with a fee of $10 per month which will go towards covering the company’s costs. Businesses uninterested in the idea, can simply not join; however, by not joining the business will forgo the free marketing that it will receive after joining. Defalco said there will be a website, where residents can visit to see a list of stores that are participating, before heading out on a shopping spree.
“This one is the most inexpensive way to get your name out,” said Defalco, who said it’s much cheaper for a business to opt-in just for the marketing compared to the current promotions they might be engaging in. “Everybody sends out discounts, coupons, Groupons, and all that,” said Defalco. He says the cost to join the program for businesses is so much less than what they currently spend on issuing promotions in newspapers and flyers. “Inexpensive advertising” was the benefit Defalco described.
The program works by providing residents a percentage of whatever they spend on a purchase at a certain establishment. An individual spending $100 at a local shop will be entitled to a $10 tax credit, provided the business in which the individual is shopping is willing to offer a 10-percent tax break discount for the consumer. The percentage is entirely up to businesses to determine, said Defalco, who says some businesses can offer a larger percentage whole others will be strapped and unable to provide more than 3-percent.
The tax credits are for homeowners, what about renters? Renters, according to Defalco, will receive a cheque rather than tax-break.
The cost: buying cards for residents, mailing out the cards, and a $600 fee that the municipality must pay prior to joining, can easily be covered by the bank with which the city does its banking, said Defalco. If an outside organization picked up the tab, the city will not have to spend any money on the program. “All the township done has been sponsored by local banks,” said Defalco.
Defalco’s company completed similar programs for Bayonne, Marlboro, and West Orange. Morris said, it’s great that in other towns banks and local sponsors have taken on the cost, however that’s no guarantee.
Andre Sayegh, the council president and 6th Ward councilman, who brought the idea up from a conference in Atlantic City, hopes it will provide some tax savings for residents. With a 4-percent tax increase (property tax cannot exceed 2-percent by state law) in the preliminary budget, Sayegh hopes to provide some relief while boosting local businesses. “This is an option Paterson can utilize going forward,” said Sayegh.