Learning From New Jersey’s Gas Tax Disaster


New Jersey has the second-lowest gas tax in the country. Residents of the state enjoy their cheap gas and neighboring New Yorkers and Pennsylvanians routinely jump across the border to take advantage of a cheap fill-up.

The average price per gallon in the state is about $2.10, with some locations showing prices between $1.80 and $1.90.

While that’s great news for commuters and road-trippers, it’s not so great for the state’s government. A low gas tax means less money for the state coffers, which has effectively bankrupted the state’s transportation department.

In fact, road construction projects state-wide were halted last week due to a lack of funds (and a hefty dose of political maneuvering). Drivers may enjoy cheap gas, but they’ve been left to navigate New Jersey’s deteriorating and unfinished roads until a solution is found.

State lawmakers are currently embroiled in a debate about how to increase taxes without angering their constituents. Gov. Chris Christie wants a 23-cent gas tax hike attached to a 1 percent sales tax cut, while others demand a gas tax hike with no cuts to the sales tax.

After state democrats refused to vote on the governor’s proposed tax increase, he abruptly shut down the construction projects it would have funded. Some of those lawmakers say the fund has enough money to last through August and call the governor’s action a retaliatory move that is vindictive and just plain wrong.

Others note that the gas tax hasn’t been increased since 1988 and believe that drastic measures must be taken to encourage action.

A newly introduced plan would phase in a 25-cent per gallon gas tax over three years as a way to fund the state’s nearly empty Transportation Trust Fund. That plan would begin with a 10-cent per gallon hike in each of the first two years, with a 5-cent hike in the third year.

New Jersey is in a position where it needs to look past political lines and solve the problem immediately. Increases in gas taxes are never popular with motorists, but the revenue is crucial to funding the roads on which they drive.

Oregon is in the midst of experimenting with a pay-per-mile tax, which gives residents the choice of paying a tax of 1.5 cents per mile driven or a 30-cent tax per gallon of fuel. So far it appears that the per-mile tax generates revenue roughly equal to the gas tax. Such programs may become more popular as vehicles become more efficient, and as more gas-free vehicles use public roads.

Politics aside, the situation in New Jersey should show the rest of the country the importance of maintaining either a gas tax or road tax capable of funding improvements to infrastructure. Not doing so will lead to an embarrassing political mess and roads that are dangerous for public use.

Would you prefer a per-gallon gas tax or a per-mile road tax? 


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