NJ Gas Relief? State Tax To Go Down 1 Cent Per Gallon

NEW JERSEY — Drivers fueling up at New Jersey gas stations will soon get a little relief at the pump — the key phrase is "a little." State officials will decrease the state gas tax by 1 cent per gallon starting Oct. 1.

The months-long stretch of historically high gas prices throughout the nation has hit New Jerseyans' wallets. But more ambitious ideas to potentially lower costs, such as allowing self-serve pumps at gas stations, have failed to move in the State Legislature. And Gov. Phil Murphy has been against suspending the state gas tax.

But the slight reduction of the gas tax isn't actually linked to efforts to tame astronomical gas prices. The action came from the New Jersey Department of the Treasury's annual calculations to comport with a 2016 state law.

New Jersey's "gas tax" or "highway fuels tax" comes from two separate taxes on gasoline and diesel — the Motor Fuels tax and the Petroleum Products Gross Receipts tax. Under the 2016 law, the state's Transportation Trust Fund must provide about $16 billion over eight years to support improvements to the state's roadways and bridges. As a result, New Jersey must adjust the Petroleum Products Gross Receipt tax rate to generate roughly $2 billion per year.

New Jersey's gas tax will decrease from 31.9 cents to 30.9 cents, while the tax rate for diesel will go from 35.9 cents to 34.9 cents. The treasury cited two reasons for the reduction. Despite high fuel costs, New Jerseyans drove more than the state projected this year. State officials also want to correct for whether projected highway-fuel consumption in the current fiscal year will exceed or fall short of Fiscal Year 2016 levels.

The Garden State has one of the nation's highest gas taxes, with states averaging 29.15 cents per gallon.

"We are pleased that this dedicated funding stream continues to provide billions of dollars across the state to support our critical transportation infrastructure needs," said State Treasurer Elizabeth Maher Muoio.

New Jersey's gas prices have fallen from their all-time high — a $5.06 per gallon average June 13, according to AAA. But fuel prices around the nation increased every month from May 2020 to last June, leaving New Jersey's costs still on the higher end at $3.93 per gallon as of Tuesday morning.

After the treasury's announcement on the gas tax, one Republican lawmaker called for greater relief from the state.

"The Murphy administration is only lowering the gas tax by a penny because that’s what the law requires them to do," said State Sen. Ed Durr (R-3). "That might save a family 15 cents a week when they fill their tank. That’s not the kind of savings that will help New Jerseyans struggling with lingering high gas prices and the highest inflation in more than 40 years."

In March, Durr proposed a $500 gas-tax rebate. State Sen. Shirley K. Turner (D-15) and Assemblymembers Verlina Reynolds-Jackson (D-15) and Assembly Deputy Speaker Paul D. Moriarty (D-4) also introduced legislation in May to reduce highway fuel taxes for 60 days. But none of the bills have left their respective committees for a floor vote.