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Is New Jersey Considering Raising the Gas Tax?

Due to over-borrowing during the past four years, New Jersey’s Transportation Trust Fund, which provides $1.6 billion a year in state funding for highway, bridge, and mass-transit construction projects, will be nearly $800 million short for the upcoming budget year.

Recent hearings were held by the New Jersey Assembly Transportation Committee to find ways to replenish the state’s Transportation Trust Fund (TTF) and raise the $1.6 billion needed to meet the state’s annual transportation spending obligations.  Among much of the discussion where hints at increasing the state’s gasoline tax.

Currently, New Jersey residents enjoy the second lowest gas tax in the nation at 14.5-cents per gallon when adding the 10.5-cent per gallon gas excise tax on retail gas and the 4-cent per gallon petroleum products gross-receipt tax (on top of the 18.4-cents federal tax). Gas is relatively cheap in New Jersey, especially compared to the taxes imposed on gas by the neighboring states of New York (50.6-cents per gallon) and Pennsylvania (41.8-cents per gallon).

A major reason the trust fund is out of money is because capital costs for transportation projects are extremely high. According to the Reason Foundation’s 21st Annual Report on the Performance of State Highway Systems, New Jersey spends $2.02 million per mile of highway, the most out of any state.

According to the same report, New Jersey’s administrative spending on state highway is the sixth highest in the nation at $44,000 per mile, which is four times the United States average of $10,500.  Also contributing to the higher costs are project labor agreements and prevailing wage legislation.

It is well-known that New Jersey is among one of the most expensive states to live, with the highest property taxes in the country, as well as high income and corporate taxes.  Additionally, New Jersey is one of two states that has an estates tax as well as an inheritance tax. An increase in the gasoline tax would further contribute to an already heavily-taxed climate.

Recent events further indicate that an increase in the gas tax may become a reality, one of which was Governor Christ Christie’s appointment of Democrat Jaime Fox to be the commissioner of the Department of Transportation.

Another was Governor Christie’s recent appearance on the “Ask the Governor” radio program where he said, “Everything is on the table for discussion, but I’m unwilling at this point in October to commit to anything on the air when I’m really going to be negotiating with members of the legislature.”

Featured image: Shutterstock.com

Damien Salamacha

Damien is an intern at Americans for Tax Reform in Washington, DC. Twitter: @DSalamacha

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