New Jersey fuel tax rate increases by nearly a dime
As of Oct. 1, an additional 9.3 cents per gallon is being collected on New Jersey’s fuel tax rates.
The New Jersey Department of Treasury said the increase is due to tax revenues falling below projections following the COVID-19 pandemic.
Fuel 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 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.
The state’s fuel rate includes two components: the petroleum products gross receipts tax and the motor fuels tax.
The total tax rates for the past two years have been set at 41.4 cents for gas and 48.4 cents for diesel.
Since the nearly dime rate increase took effect the first of the month, the gas tax has increased from 14.5 cents to 50.7 cents over the past four years. Over the same time period, the then-17.5-cent diesel tax has increased to 57.7 cents.
Point and counterpoint
Maher Muoio said 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 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 have used his executive power to waive the rate hike.
“Considering his own executive actions kept people home and off the roads, artificially depressing gas consumption, drivers shouldn’t be penalized,” said Sen. Steve Oroho, R-Franklin. LL