The fuel tax rates in New Jersey soon will increase. Effective Oct. 1, a 9.3-cent increase in the state’s fuel tax rates will be imposed.
The New Jersey Department of Treasury says the upcoming increase is needed because tax revenues have fallen below projections. Officials blame the COVID-19 pandemic for the nearly dime rate hike.
Fuel tax rate increase linked to 2016 law
A 2016 state law requires a steady stream of revenue to support the state’s Transportation Trust Fund. The rule requires the state treasurer to adjust the tax rate each year to ensure it brings in revenue needed to pay the bills for transportation work.
The once-depleted fund is required to provide $16 billion over eight years to support infrastructure work.
“The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target,” State Treasurer Elizabeth Maher Muoio said in prepared remarks. “When it does not, the gas tax rate has to be adjusted accordingly in order for us to meet our obligation under the law and fully fund the state’s many pressing transportation infrastructure needs.”
What’s next?
The state’s fuel rate includes two components. The petroleum products gross receipt tax has been set at 30.9 cents since October 2018. The diesel rate is 34.9 cents.
Additionally, the motor fuels tax rate on gas is 10.5 cents. The diesel rate is 13.5 cents.
The total tax rates for gas and diesel are 41.4 cents and 48.4 cents, respectively.
Effective Oct. 1, the gas rate will have increased from 14.5 cents to 50.7 cents over four years. Over the same time period, the then-17.5-cent diesel rate will have increased to 57.7 cents.
Point and counterpoint on raising the fuel tax rate
Maher Muoio says the increase is necessary because highway fuel consumption took a significant hit in fiscal year 2020 due to the economic downturn caused by the coronavirus.
Specifically, the Treasury notes the consumption of gasoline declined by 38.7% from March to May. Diesel fuel consumption dipped by 16.5%. The agency reports that the consumption of fuel continues to be reduced.
As a result, highway fuels revenue collections for the fiscal year are projected to fall short of the target by $154 million.
Critics say Democratic Gov. Phil Murphy should use his executive power to waive the pending rate hike.
“Considering his own executive actions kept people home and off the roads, artificially depressing gas consumption, driver’s shouldn’t be penalized,” said Sen. Steve Oroho, R-Franklin.
More Land Line coverage of news from New Jersey is available.
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September 01, 2020 at 04:00AM
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New Jersey fuel tax rate set to increase nearly 10 cents - Land Line - Land Line Media
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