New Jersey’s Gasoline Tax Rising 22% on Effects of Stay-at-Home Order

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New Jersey’s gasoline tax will rise 22%, to 50.7 cents per gallon, to maintain a revenue stream for road and rail projects amid a massive drop in fuel consumption. Diesel will go up 19%, to 57.7 cents.

The increase, announced by state Treasurer Elizabeth Muoio, will take effect on Oct. 1.

Tax-rate changes, she said in statement, “are dictated by several factors that are beyond the control of the administration.”

The revenue stream feeds the $16 billion Transportation Trust Fund. By a 2016 law, the rate must be examined each August and raised if it appears that projected consumption won’t generate enough money to cover debt and current projects from 2017-2024. The revenue numbers are reviewed by the treasurer, with the nonpartisan legislative budget and finance officer as a consultant.

“Highway fuel consumption took a significant hit in FY 2020 because of the economic downturn caused by the Covid-19 epidemic,” Muoio said.

Governor Phil Murphy, a first-term Democrat, closed non-essential businesses on March 21 to fight the virus, leading to record unemployment and work-from-home arrangements. Gasoline consumption declined 39% from March to May and diesel dropped 17%, Muoio said.

Fuel consumption “continues to be depressed, as many people continue to work from home and limit extracurricular activity,” according to the statement. Almost 16,000 New Jersey deaths have a lab-confirmed or probable link to the novel coronavirus.

New Jersey charges a motor-fuels tax of 10.5 cents and a petroleum products gross-receipts tax of 30.9 cents per gallon of gasoline. On diesel fuel, the same taxes are 13.5 cents and 34.9 cents. New Jersey most recently raised the gasoline tax in 2018.

©2020 Bloomberg L.P.

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