New Gas Tax? NJ Says It's 'Engaged' In Study That May Trigger It

NEW JERSEY – New Jersey says it's "engaged" in a plan that critics say could lead to higher prices at the gas pump, all part of a multi-state effort to reduce car pollution and curb climate change.

New Jersey and other states have been reviewing a "cap-and-invest" program that would function fundamentally as a "gas tax," according to Politico, channeling revenue toward curbing climate change and pollution and benefitting communities dealing with rising seas, erratic weather patterns and flooding.

Money would essentially be raised through taxes on gasoline and diesel fuel that would be passed onto consumers, according to The Hartford Courant. That money would ultimately be invested in mass transit, electric-vehicle charging and infrastructure.

It's not exactly clear how much New Jersey drivers would pay under the plan. The states engaged in the "Transportation Climate Initiative" are working on a 10-year plan of reducing emissions starting in 2022.

The "Transportation Climate Initiative" is not yet complete, so no determination has been made on New Jersey’s extended participation in the program and what conclusions may be made.

But as of now, Alexandra Altman, a spokeswoman for Gov. Phil Murphy, said in reaction to the Politico article: "We are engaged in the plan."

"As a member of the Transportation Climate Initiative, New Jersey is engaged in the process of creating what a regional cap-and-trade program could look like in order to reduce emissions from the transportation sector," she said in response to the Politico article.

The Transportation Climate Initiative prefers the term "allowances" rather than tax, saying the the "cap-and-invest" program would work like this:

• Placing a “cap” on carbon pollution from burning fossil fuels in the transportation sector to reduce transportation emissions.
• Requiring large gasoline and diesel fuel suppliers to hold allowances for the pollution that results from the combustion of the fuels that they sell to consumers.
• Bringing in proceeds that can be used to fund programs such as increasing public transit.

Other states engaged in the Transportation and Climate Initiative are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont, Virginia.

Officials from those states told Politico that they view the regional approach as a way to have a significant impact in reducing emissions from the transportation sector, and ultimately bucking the Trump administration.

But the plan has critics who also say "cap-and-invest" it's just another way to impose a gas tax that will adversely impact consumers and the economy.

David Blackmon, an independent energy analyst/consultant, criticized the plan in a Forbes column, calling it a "regional gas tax scheme" that's similar to every other “cap and trade” system.

Under the plan, he said, fuel wholesalers will pay for emissions allowances and then pass on those costs to the consumers.

That system involves politicians "trying to hide the tax from consumers by placing the point of taxation upstream, in this case with gasoline wholesalers."

"Everyone involved knows that those wholesalers will pass along those costs to consumers, but the vast majority of consumers will never understand why the cost of filling their cars suddenly went up," he wrote. "They’ll just see a higher cost at the pump and – conveniently, for the governors involved – most will just blame it on that evil conspiracy by 'big oil' to make those 'windfall profits.' "

Others, particularly environmentalists, have praised the states' efforts.

"Bold and rapid action is needed to slash the ever-growing emissions from the transportation sector," said Sierra Club Regional Deputy Director Mark Kresowik. "The listening sessions were an important step to address transportation issues, and now it’s time for states to take the next step and propose meaningful region-wide action -- ideally through a cap and invest program -- that will increase electric vehicle usage, expand public transit, and ensure walkable and bikable communities to protect our clean air and region."

The gas tax has become a sticky issue in New Jersey in recent years since the state has raise it twice in three years.

Last month, the Murphy administration decided not to raise the gas tax again, nearly three years after raising it 23 cents to help fund the Transportation Trust Fund. The state decided not to trigger a little-talked-about provision in the 2016 gas-tax increase could have raised gas prices on Oct. 1.

"We're pleased that fuel consumption levels, coupled with our realistic projections last year, have allowed us to avoid an increase in the gas tax rate for this year," State Treasurer Elizabeth Maher Muoio said. "This dedicated revenue stream has enabled us to disburse billions in funding across the state to bolster our transportation infrastructure and keep New Jersey moving forward."

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