TRENTON, NJ — After a review of fuel consumption statistics, the New Jersey Department of the Treasury announced in August that lower fuel consumption trends, caused by the COVID-19 pandemic, will result in a gas tax increase of 9.3 cents per gallon in October.
The Treasury Department says that the hike is needed in order to ensure compliance with a 2016 law signed by then-Gov. Chris Christie that requires a steady stream of revenue to support the state’s Transportation Trust Fund (TTF) program. The TTF program is required to provide $16 billion over eight years to support critical infrastructure improvements to bridges and roadways. To ensure the state has the funds to support these projects, the law dictates that gas tax rate must be adjusted accordingly to generate roughly $2 billion per year.
“Any changes in the gas tax rate are dictated by several factors that are beyond the control of the administration,” said State Treasurer Elizabeth Maher Muoio. “The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target. When it does not, the gas tax rate has to be adjusted accordingly. Highway fuels consumption took a significant hit in FY 2020 because of the economic downturn caused by the COVID-19 pandemic.”
Treasury noted that consumption of gasoline declined by a total of 38.7% from March to May, while diesel fuel consumption declined by 16.5%. Consumption of gasoline and diesel fuel continues to be depressed as many people continue to work from home and limit extracurricular activity.
Due to the formula explicitly outlined in the law, the PPGR tax rate on gasoline and diesel fuel will increase on Oct. 1 from 30.9 cents to 40.2 cents for gasoline and from 34.9 cents to 44.2 cents for diesel fuel. When coupled with the current 10.5 cent Motor Fuels Tax rate on gasoline and the 13.5 cent rate for diesel fuel, the total tax rates for gasoline and diesel fuel will be 50.7 cents and 57.7 cents, respectively.