Gas tax increase remains uncertain
What’s Next with the Gas Tax?
When New Jersey’s new fiscal year began on July 1, funding for the TTF was stalled. Lawmakers hadn’t agreed upon a plan to replenish the transportation trust fund (TTF) by the deadline, and small business owners were relieved by the news. Meanwhile, local road projects were suspended and many road workers were temporarily laid off.
Last month, however, negotiations over TTF funding renewed, and on July 22, Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto announced they had reached an agreement on raising the gas tax. Governor Chris Christie has made it clear that he will not sign any gas tax increase without reciprocal tax fairness for New Jerseyans; the updated plan proposes to reduce five different taxes in exchange for increasing the gas tax by 23 cents per gallon.
Here’s a look at the tax cut measures proposed:
- Increase the earned income tax credit for the working poor
- Increase the state’s gross income tax exclusion on pension and retirement income
- Phase out the estate tax
- Introduce an income tax deduction for state gas taxpayers earning up to $100,000 per year
- Allow a $3,000 personal income tax exemption for veterans
Gov. Christie’s press secretary released a statement in response to the plan, saying that Sweeney and Prieto have not shared specific details of their joint proposal and he cannot determine whether the proposal truly offers tax fairness and broad-based tax relief until he can review the details.
At press time, a revised bill has passed the Senate Budget & Appropriations Committee. It is not the same bill that was passed by the Assembly so they are at a standstill.
The Senate Budget Committee released from Committee a new Transportation Trust Fund (TTF) plan, Senate 2411 and Senate 2412 and tax reform legislation by a vote of 8-4 with one abstention. This newly proposed plan includes a 23 cent gas tax increase to fund the TTF, and tax reform proposals, including a phase out of the estate tax, an increase in the exemption for retirement income, and an increase in the Earned Income Tax Credit. This plan is similar to the plan initially proposed in June by the Senate which was not ultimately advanced.
As of Tuesday, it is unclear whether this latest version will continue to advance as there does not appear to be sufficient support for a Senate and Assembly override. Furthermore, Governor Christie has said that he does not support this new plan. Therefore, a gas tax increase combined with other tax relief, which NFIB has continuously referred to as a fiscal shell game, is still largely uncertain. In the meantime, the Governor has signed an executive order that halts all non-essential road and bridge repair
