How A Federal Gas Tax Suspension Would Impact Prices At NJ Pumps

Drivers in New Jersey are still paying elevated prices at the pump and there has been national debate over whether federal and state gas taxes should be temporarily suspended.

The pressure on drivers comes as the war in Iran has disrupted oil markets and pushed gasoline prices higher for much of the spring and into the summer. President Donald Trump has said he might suspend the 18.4-cent per gallon federal gas tax in response to the pressure on consumers.

With gas prices on the rise again after the resumption of bombing in Iran, the discussion

In the United States, taxes and fees contribute an average of 51 cents to the price of every gallon of regular gasoline. While the federal government collects an 18.4-cent tax, the remaining portion is composed of various state-level taxes.

Gas Taxes In New Jersey

An NBC News analysis looked at how the cost of a gallon of regular gasoline has changed since the war began and how the cost at the pump would change with the suspension of taxes. Here’s how it breaks down in New Jersey:

Price per gallon before the war: $2.93
Price per gallon on July 13: $3.93
Price per gallon without federal taxes: $3.75
Price per gallon without federal or state taxes: $3.25

How Does New Jersey's Gas Tax Figure In?

New Jersey has the eighth-highest gasoline tax in the country, currently 49.1 cents per gallon. The state's gasoline tax includes two elements: The petroleum products gross receipts tax, which accounts for 38.6 cents, and the motor fuels tax, which is 10.5 cents per gallon.

The petroleum products gross receipts tax is the piece that changes from year to year under the 2016 law signed by then-Gov. Chris Christie that adjusts the gasoline tax based on the prior year's revenues, with the tax dedicated to the state’s Transportation Trust Fund, which supports the NJ Department of Transportation, NJ Transit and municipal infrastructure projects.

Suspending the gasoline tax in New Jersey would require action by the state Legislature.

What Happens Next?

A federal gas tax holiday would require congressional approval. Democrats in the House and Senate in March proposed measures for a temporary gas tax holiday.

Supporters of a temporary tax holiday say it could help commuters, families and small businesses immediately, especially in places where driving is a necessity. Critics say gas-tax suspensions can drain transportation funding, may not be fully passed along to consumers, and do not address the underlying oil-market disruption.