Almost two years ago New Jersey, under Governor Chris Christie took the dramatic step of raising the fuel tax by 23 cents per gallon. Though New Jersey is a high taxed state their low fuel cost was a fun little anomaly until this hike. Well, beginning October 1stthe fuel tax will rise again by 4.3 cents per gallon bringing the total tax to 41.4 cents per gallon. In just a few years New Jersey will have gone from a state with one of the lowest fuel taxes (2nd) to one of the highest (9th).
The original Christie deal was done in exchange for cutting the sales tax, eliminating the estate tax, reducing taxes on retirement income, raising tax credits for the working poor and creating a new tax credit for veterans. The increased fuel tax is meant to fund the state’s aggressive 8-year $16 billion transportation and infrastructure improvements. This has left customers shell shocked and consumption has dropped in the time since the hike went into effect. The diminished demand is what prompted Governor Phil Murphy to raise the tax again as revenues are falling short of projections.
This is a dangerous cycle for New Jersey to play. The fuel tax is one of the best ways to fund infrastructure and New Jersey’s was so low that raising it was the right thing to do. Clearly though, the consumers are not happy and are unlikely to react kindly to this hike. On top of that, between better mileage and alternative fuel vehicles a reduced demand for fuel is inevitable.
For the trucking industry increased fuel costs are always something to monitor but if the state is desperate for cash, and they are not getting it from increased fuel taxes, then it would not be surprising if toll increases, registration increases, ticket blitzes, or other financial burdens are placed on trucking in order to make up the lost revenue.