3 New NJ Tax Hikes Start Now

One way or another, you're going to have to dig a little deeper in your pocket on Monday if you live or drive in New Jersey. Four new tax hikes will hit the state's residents and drivers.

Perhaps the most notable one that took effect on Monday is the gas tax increase of 4.3 cents, according to the state Department of Treasury. Lower fuel consumption over the last two years necessitated the hike, state officials said.

Also, a tax on e-cigarettes and airbnbs took effect by Monday (see below). An online sales tax, which was expected to take effect on Monday, is now expected to be enacted by Nov. 1.

What triggered the gas tax hike is a little-talked-about provision in the recent 23 cent gas-tax increase that could either hike, reduce or keep the gas tax the same based on consumption. The change depends on how much of the tax has been collected over the past year to fund the Transportation Trust Fund, which pays for important and emergency road projects.

Nevertheless, the Murphy administration blamed former Gov. Chris Christie and his team for the hike.

“The precise change in the gas tax rate is dictated by several factors, all of which are beyond the control of the current administration,” said State Treasurer Elizabeth Maher Muoio. “The (23-cent gas tax hike) law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target.

"Unfortunately, because the Christie administration overestimated gas consumption rates last year, the tax rate has to be increased by nearly two cents more this year in order for us to meet our obligation under the statute and fully fund the state’s many pressing transportation infrastructure needs.”

Read more: N.J. Gas Tax Hike: What You Need To Know

Here are other tax hikes that are taking effect:

E-cigs

This law, A-4132/S-2731, imposes 10-cent per fluid milliliter tax related to sales of liquid nicotine. The law went into effect on Saturday.

Electronic cigarettes and similar tobacco-substitute smoking devices are designed to deliver liquid nicotine to users of the product, according to the legislation. The term "liquid nicotine" is defined in the bill to mean any solution containing nicotine that is designed or sold for use with an electronic smoking device.

The tax is imposed on the sale, use, or distribution of liquid nicotine within New Jersey by a distributor or wholesaler to a retailer dealer or consumer.

Airbnb taxes

The law compels owners who put their homes, or rooms, up for short-term rent to collect the state's 6.625 sales tax and 5 percent occupancy tax. Local towns also can also charge taxes of up to 3 percent. The law went into effect on Monday.

The law (A-1753) imposes the same taxes and fees that hotels and motels currently must pay to the state on "transient accommodations," or residences used as temporary lodging.

The law also imposes the following taxes and fees where applicable: the hotel occupancy fee, the Atlantic City luxury tax, the Atlantic City promotion fee, the Cape May County tourism sales tax, the Cape May County tourism assessment, the municipal occupancy tax, the sports and entertainment facility tax and the Meadowlands regional hotel use assessment.

Under the law, permanent residential rentals will continue to be exempt from those same taxes and fees. The legislation also exempts charitable, non-profit organizations from collecting the taxes and fees when providing transient accommodations.

"Our laws need to be updated to keep up with changes brought about by new technology," said Assemblywoman Annette Quijano, D-Union. "The fact that taxes are not paid for stays at locations rented through sites like Airbnb but are applied to stays in hotels is an unfair advantage that hurts the hospitality industry and takes funding away from municipalities for important programs. This bill levels the playing field and provides tax fairness for the entire hospitality industry in New Jersey."

"We can't allow rules to apply to one business but not another when they essentially provide the same service," said Assemblywoman Vainieri Huttle, D-Bergen. "Accommodations booked through sites like Airbnb are used like hotel rooms. They should be subject to the same obligation."

Governor Murphy photo