Passing a 23 Cent Tax Hike

Passing a 23 Cent Tax Hike

Holly Reidinger, Managing Editor

Governor Chris Christie and Democratic leaders recently announced an agreement on a form of transportation funding that will raise New Jersey’s gas tax by 23 cents per gallon, ending the statewide construction freeze. According to NJ.com, the higher tax will begin around early October for motorists. However, the tax raise will be offset by a reduction in the sales tax from 7 percent to 6.875 in 2017 and 6.625 percent in 2018.

The sales tax reduction is part of a package of tax cuts the lawmakers agreed to in exchange for the first gas tax hike since 1988. The compromise, struck Friday afternoon, also eliminates the estate tax, which is one of the higher taxes in our state. It will ease taxes on retirement income, which is taxed over $20,000 for couples filing jointly, $15,000 for individuals and $10,000 for those who are married but file separately.  It will also boost the Earned Income Tax Credit for the working poor. Additionally, veterans who were honorably discharged from active service in the military or National Guard will be eligible for an income tax exemption.  

This tax compromise seeks to replenish the state’s Transportation Trust Fund, which pays for infrastructure improvements.

Governor Christie said, “While I’m not authorizing any other tax increase during my time as governor, I’m authorizing this one because of the importance of the Transportation Trust Fund, the tax fairness that we’ve accomplished together, and the compromise we’ve reached and because we need to responsibly finance this type of activity.”

The fund ran out of money for new projects last month. Both houses of the State Legislature will be called into a special committee hearing and voting session Wednesday morning, according to Assembly Speaker Vincent Prieto (D-Hudson). The increase in the gas tax would take effect after it received legislative approval.

American Automobile Association has estimated that an additional 23 cents a gallon at the pump will cost the average driver about $170 more a year. At 37.5 cents a gallon, gas taxes in the Garden State will go from second-lowest in the U.S. to seventh-highest.

“It’s cheaper than New York. It’s cheaper than Pennsylvania. It’s cheaper than Connecticut,” Sweeney said, “We will still have the lowest gas tax in this region.”

The new, 23 cent tax will finance an eight-year, $16 billion transportation program that Christie boasted will improve the state’s infrastructure and economy.

Pic- awildduck.com