NJ gas tax to increase 1 cent per gallon Oct. 1; some lawmakers call for end to practice
New Jersey’s gas tax is expected to increase by 1 cent per gallon on Oct. 1, according to the Murphy administration. This is due to the gas tax formula set by New Jersey state law.
But some Republican lawmakers are calling on Gov. Phil Murphy to put a stop to the fuel tax increase.
“Whenever the combined taxes on motor fuels come in under $2 billion, there is an adjustment for Oct. 1 to play catch-up,” says Eric Degesero, of the New Jersey Fuel Merchants Association. “And conversely, if the revenue comes in over $2 billion, there’s an adjustment downward, and it’s been a two-way street since the [state] Legislature passed the law.”
The law was passed in 2016 under the Christie administration. There have been years like 2020 where the gas tax spiked over 9 cents due to the pandemic when no one was driving or was lowered by 8 cents in 2021 amid higher fuel rates.
About $800 million of the money raised goes to the Department of Transportation and about $750 million to New Jersey Transit.
What people like Degesero and the fuel merchants are warning is that as electric cars become more and more popular, and less fuel is sold, the gas tax will have to go up on people who still drive internal combustion vehicles.
The tax increased from 30.9 cents to 31.8 cents for gasoline and from 34.9 cents to 35.8 cents for diesel fuel. When combined with the Motor Fuels Tax, which is fixed at 10.5 cents for gasoline and 13.5 cents for diesel fuel, the total tax rates that motorists will pay for gasoline will be 42.3 cents and diesel fuel will be 49.3 cents.
As Murphy administration officials have said in years past, even if they did somehow halt the gas tax increase, they’d still be on the hook for that $2 billion for transportation projects, meaning that money would simply have to come from somewhere else.
The current law to fund the Transportation Trust Fund expires in 2026.