Gas Tax Holiday to Ease High Prices Not in the Plans in NJ
TRENTON – Inflation is higher than it’s been in 40 years, with spiking gasoline prices the most visible culprit, but the state budget plan doesn’t include any proposals specifically addressing the price at the pump, such as a gas tax holiday.
There are unrelated affordability proposals in the plan. However, property tax rebates might not arrive until 2023, and fee holidays only go so far. Even a free driver’s license renewal, which wouldn’t start until October and would help one-quarter of drivers, would amount to less than half a tank of gas.
In a Monday interview on CNBC, Murphy said the state’s options are limited. He seemed to rule out a holiday for the state’s gas tax of 42.4 cents per gallon.
“Not a lot, unfortunately,” Murphy said, when asked what the state could do. “In fact, we have a gas tax that’s set every August. This past August it went down over 8 cents. It’s subject to a formula. I’d like to see that continue to go down.”
“I’ve said at the federal level, I like the idea of a gas tax holiday, at least for a period of time,” he said.
The federal gas tax is 18.3 cents a gallon.
The national average price for a gallon of regular unleaded reached $4.252 on Wednesday, which is a record high though is not if past prices are adjusted for inflation. The average in New Jersey was $4.328, up 5.6 cents from a day earlier and up 64.3 cents in the past week, driven by the war in Ukraine.
“No question what we’re facing, and we’ll do everything we can – in our case probably indirectly as opposed to a whole lot we can do direct,” Murphy said.
U.S. Rep. Donald Norcross, D-Camden, called for the temporary suspension of both the federal and state gas taxes.
“We support our friends in Ukraine in their fight for freedom. We must also act to protect the pocketbooks of working- and middle-class families here at home,” Norcross said.
“We should temporarily suspend the state and federal gas tax and continue full funding of the highway and transportation trust accounts to protect South Jersey families at the pump and preserve jobs, saving New Jersey taxpayers over 60 cents per gallon,” he said.
Norcross said the taxes should be suspended because the country must be “ever mindful that we need to have fuel prices that people can afford to get to their workplace.”
Governors in other states have expressed openness toward a temporary suspension of their gas taxes. California – where prices averaged $5.57 Wednesday – has proposed a holiday for this year’s increase in its gas tax as well as gas rebates for drivers.
Senior administration officials said Murphy believes it’s an issue better solved at the federal level because New Jersey’s state-level tax is cemented by state law, giving the executive branch little latitude.
A state Treasury Department official said current revenue forecasts in the budget don’t take into account any impact from new developments from the Ukraine war or the spike in gas prices.
The current forecast still assumes state gasoline consumption that remains a little below pre-pandemic levels. That could have to be reevaluated ahead of the gas tax calculation in August that will determine the rate taking effect Oct. 1, the official said.