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N.J. Set to Raise Gas Tax

The 23-CPG increase would replenish state infrastructure fund

TRENTON, N.J. -- New Jersey will soon go from having the second-lowest gas tax in the country to the seventh-highest.

After months of wrangling, Gov. Chris Christie (R) and the state’s Democrat-led legislature finally agreed to a 23-cent-per-gallon (CPG) increase in the gasoline tax late last week, news site NJ.com reported. The gas tax would rise to 37.5 CPG, costing the average driver an additional $170 per year, according to AAA estimates.

The revenue would help restore the depleted state Transportation Trust Fund, which finances road and rail construction, and finance an eight-year, $16 billion transportation program.

The state legislature will vote this Wednesday on the gas-tax increase. If it passes, this would mark the first increase in the gas tax since 1988. It would take effect once it clears the vote and is signed by the governor.

Christie had resisted the move for months as part of a “tax fairness” stance, but finally agreed to the gas-tax increase after lawmakers settled on a corresponding series of tax reductions. These include a cut of the state sales tax from 7% to 6.875% in 2017, and then a further cut to 6.625% in 2018. Lawmakers also agreed to eliminate the estate tax, lower taxes on retirement income, increase the Earned Income Tax Credit and offer a tax deduction for veterans.

Christie highlighted the fact that this would mark the longest and largest reauthorization of the Transportation Trust Fund in state history, but said the gas-tax increase was a one-time move during his administration.

“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,” Christie said.

The gas-tax increase would give New Jersey the seventh-highest gas tax in the United States, but it would still have one of the lowest in its region.

Meanwhile, New Jersey voters are set to decide this November on a ballot initiative that would require all gas-tax funds to be dedicated to transportation projects, which Christie also supports.
 

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