Here’s something few people saw coming: New Jersey is going to lower a tax.
Treasury officials announced Tuesday that the state gas tax will decrease 8.3 cents Oct. 1.
The adjustment, made in accordance with the 2016 law that requires a steady stream of revenue to support the state’s Transportation Trust Fund, was a bit of a surprise, considering many felt gas use has been down. State Treasurer Elizabeth Maher Muoio said usage has met — or exceeded — expectations.
“Because actual consumption in Fiscal Year 2021 was so closely in line with our projections made last August, coupled with the fact that consumption in the current fiscal year is projected to be above last fiscal year’s levels, our analysis of the formula dictates an 8.3-cent decrease this coming October,” she said. “We are pleased that this dedicated funding stream continues to provide billions of dollars across the state to support our critical transportation infrastructure needs.”
State officials explained it this way:
- Under the 2016 law enacted during Gov. Chris Christie’s administration, New Jersey’s TTF program is required to provide $16 billion over eight years to support critical infrastructure improvements to the state’s roadways and bridges. In order to ensure the state has the funds necessary to support these projects, the law dictates that the Petroleum Products Gross Receipt tax rate must be adjusted accordingly to generate roughly $2 billion per year.
- What is generally called the “gas tax” or the “highway fuels tax” is actually two separate taxes on gasoline and diesel fuel — the Motor Fuels tax and the Petroleum Products Gross Receipts tax.
- Under the formula explicitly outlined in the 2016 law, the PPGR tax rate will decrease Oct. 1 from 40.2 cents to 31.9 cents for gasoline and from 44.2 cents to 35.9 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 and diesel fuel will be 42.4 cents and 49.4 cents, respectively.