New Jersey Soon to Raise Gas Taxes to Cope with Infrastructure Crisis

Gas taxes in new Jersey are one of the lowest in the country. The state collects just 14.5 cents per gallon as tax. Of this 10.5 cents is motor fuels tax and 4 cents is petroleum products tax. The motor fuel was first imposed in 1988 while the petroleum products tax was imposed in 1990. Both haven’t changed since then.

Now the state is staring at a crumbling infrastructure and a nearly empty transportation fund. In this scenario, the state may have no other option but to raise taxes on gas, a proposal that would have been considered unthinkable at one point.

The new deal, which has received bipartisan support from both the state Senate and House of Representatives, propose to increase tax rates by 23 cents, bringing the tax rate close to that charged in neighboring states. If the gas tax proposal passes muster, it will bring in close to $20 billion into the state’s coffers over the next ten years.

Any proposal to replenish the fund will run into troubled waters with the state’s Republicans. To sweeten the deal, the lawmakers said that if they are allowed to increase the gas taxes, the state would do away with the estate tax, which is expected to benefit thousands of middle income citizens.

But they will have to arrive at a deal quickly because the state cannot wait for long. The American Society of Civil Engineers recently gave a D-plus grade to the state’s infrastructure. Their report said that more than 550 bridges in the state were structurally deficient and urgently needed major repairs.

New Jersey Transit, which handles the state’s bus lines and passenger rail system is also reeling under a $46 million budget deficit, which needs to be plugged. The only hope is that the Gov. Christie and the lawmakers break their deadlock and come to an agreement that will be good for the state.

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