New Jersey’s gasoline tax was set to drop 8.3 cents to 42.4 cents a gallon on Oct. 1, after drivers were forced to pay more at the pump a year ago, state officials announced in August. Drivers were hit with a 9.3 cent hike last October as the state sought to recoup hundreds of millions in revenue lost when drivers stayed home during the early months of the coronavirus pandemic.
Each penny on the tax typically figures out to about $50 million in revenue.
At 42.2 cents a gallon, New Jersey’s gas tax will drop from the fourth highest among U.S. states to tenth, behind California, Illinois, Pennsylvania, Nevada, Hawaii, Indiana, Washington, New York, and Michigan, according to a July survey by the American Petroleum Institute.
New Jersey’s tax on gasoline has risen more than 36 cents a gallon since 2016, when former Gov. Chris Christie and Democrats who control the Legislature agreed to a 23-cent a gallon hike to raise money for road and rail projects. That deal also laid the groundwork for future adjustments to the tax rate by guaranteeing the gas tax, which fluctuates based on how much gas people buy, will generate enough revenue to pay for the eight-year, $16 billion Transportation Trust Fund program.
If gas sales and gas tax dollars are booming, then the treasurer can reduce the tax. But if it falls short of the $2 billion target in one year, the treasurer is supposed to increase it in the next.
Gov. Murphy raised the tax 9.3 cents a gallon last fall, following a 4.3-cent increase in 2018. He did not hike it in 2019 despite a slight shortfall. Gas sales plummeted to 20% of their pre-pandemic levels in 2020, he said, but they were back up to about 80% to 85% this spring.
Source: NJ.com
