The proposal would affect any item subject to New Jersey's sales tax, from restaurant meals to automobiles.
Republican leaders announced the proposal at a Tuesday afternoon news conference.
Two Republican officials said it would jump-start the economy by allowing customers to pay less for merchandise and increasing retail sales.
Most of the estimated $500 million in lost tax revenue would be offset by the increased business activity, Republican officials said. They said the rest could be recouped through budget cuts.
The plan is being prepared for introduction in the Assembly on Thursday.
Gov. Jon Corzine, who plans to outline his own economic stimulus package on Thursday, said the Republicans' proposal would be looked at, though he's not sure now is the best time to enact such a measure.
"We're probably going to have to talk about cutting spending, so we have to look at it in that context: Is that the place were we could get the most bang for our buck?" Corzine said after attending a Campbell Soup groundbreaking in Camden.
"Right now, we're seeing a very substantial falloff in revenues from the sales tax and other aspects of state funding, so I'm not sure this is the time we need to be doing that," the governor said.
Later, his spokesman, Robert Corrales, indicated in a statement that Corzine would not support the plan.
"Removing five to six weeks of revenue will not help people get through this financial storm when they are focused on keeping their jobs and homes right now, not their holiday shopping," said Corrales.
The state's business community, however, was quick to praise the plan.
The New Jersey Restaurant Association said it applauded any effort to put more money in consumers' hands.
"We believe this short-term fix will reap benefits for consumers, businesses and the overall economy," said NJRA President Deborah Dowdell.
Speaking on "Meet the Press" Sunday, Corzine, who once headed investment giant Goldman Sachs, said his proposal will include plans to protect neighborhoods by buying foreclosed homes and create energy-sector and highway construction jobs.
The governor predicted that the economy would get worse before it gets better, and said higher unemployment is nearly inevitable. However, he said New Jersey is in better financial shape than some of its neighbors because $600 million was pared from the current state budget.
Corzine also has asked members of his Cabinet to draft plans to cut an additional 5 percent from their budgets. The across-the-board cuts would save $500 million more if implemented.
Republicans say their sales tax proposal is unique. Though 16 other states sometimes suspend their sales tax or a portion of it, those "holidays" last no longer than a week and typically exempt some, but not all, taxable goods.
The state already waives its share, or half of New Jersey's 7 percent sales tax, in Urban Enterprise Zones.
The governor and lawmakers in both houses have been concerned with how to blunt the impact of the recession in New Jersey in recent weeks.
Corzine convened an emergency economic summit last month, and has called the Legislature into a joint session on Thursday. The Assembly recently devoted an entire session day to the economic crisis, and the state Senate budget committee has scheduled hearings.
Assembly Speaker Joe Roberts acknowledged at the start of the Assembly session that there isn't much New Jersey lawmakers can do about the global economic situation. However, he said lawmakers are obligated to do what they can to help New Jerseyans through it.
Among the ideas being considered in the Legislature are proposals to make New Jersey more business-friendly. A recent Tax Foundation report ranked the Garden State last among the 50 states in its business climate index.
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