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State Treasurer Elizabeth Muoio

Gas tax to rise by 9.3 cents in October

Fuel collections face $154 million shortfall after depressed lockdown travel

By Nikita Biryukov, August 28 2020 1:29 pm

New Jersey’s Gas tax is going up, the Treasury announced Friday.

The Petroleum Products Gross Receipt tax will increase by 9.3 cents per gallon, from 30.9 cents to 40.2 cents per gallon of gasoline, on Oct. 1.

The PPGR tax for diesel fuel will jump to 44.2 cents, from 34.9 cents per gallon.

With the 10.5 cent per gallon Motor Fuel tax added in, the total fees will be 50.7 cents per gallon of gasoline and 57.7 cents per gallon of diesel fuel.

The increases are statutorily required by a 2016 law that mandates funding levels for the Transportation Trust Fund. If PPGR revenues fall, the tax increases. If they rise, it drops.

“As we’ve noted before, any changes in the gas tax rate are dictated by several factors that are beyond the control of the administration,” said State Treasurer Elizabeth Maher Muoio.  “The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target. When it does not, the gas tax rate has to be adjusted accordingly in order for us to meet our obligation under the law and fully fund the state’s many pressing transportation infrastructure needs. Highway fuels consumption took a significant hit in FY 2020 because of the economic downturn caused by the COVID-19 pandemic.”

The COVID-19 crisis sharply reduced travel in the state for months, and while residents have returned to the road in some numbers, revenues are still down. Between March and May — the height of the state’s lockdown — gasoline consumption dropped by 38.7%, while diesel consumption declined by a more modest 16.5%.

Overall, the gas tax revenues are expected to fall $154 million short of their target for fiscal year 2020. The rate increases are meant, in part, to make up for that shortfall in the coming fiscal year.

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