New Jersey gas tax-estate tax link draws fire

OREANDA-NEWS. June 21, 2016. A bill to eliminate New Jersey's estate tax to offset a proposed gasoline and diesel tax hike is prompting backlash that may threaten the effort.

New Jersey drivers currently are taxed at 10.5?/USG, or 14.5?/USG including special fees. The gasoline tax and fee proposal, which has yet to be written into a bill, would raise gasoline taxes by 23?/USG to 37.55?/USG. Diesel taxes would rise 26?/USG to 43.75? from 17.75?/USG.

Federal and state gas taxes are rarely increased, leading to shortfalls in the infrastructure funds they typically support. The recent drop in gasoline prices that has followed the prolonged drop in oil has made some tax increases more palatable. Idaho and Rhode Island raised their gas taxes in 2015 while Maryland has increased its gas tax every year since 2013.

New Jersey governor Chris Christie's long standing opposition to a standalone gas tax increase lead some gas tax advocates to file a bill connecting it to the elimination of the state's estate tax. This has raised the ire of a number of lawmakers.

Assemblyman John Wisniewski (D), a supporter of the tax increase, said the estate tax cut would benefit an estimated 4,000 New Jersey families who pay that tax, but at the expense of the 5mn residents who pay the gas tax. Cutting the estate tax would reduce state revenue by \\$600mn/year.

Jeff Tittel, director of the Sierra Club's New Jersey chapter, puts it more bluntly, saying it amounts to "a tax on Chevy drivers and giving a tax break to Rolls Royce drivers."

The proposed tax hike has both bi-partisan support and bi-partisan resistance. State senator Michael Doherty (R) opposes the tentative increase, saying that the tax itself could fluctuate, as the planned 23?/USG hike is based in part on charging 7pc on the price/USG, along with additional taxes.

Doherty also says spending from the state's infrastructure fund is traditionally rife with conflicts. He suspects politicians are looking for a way to fund pet projects, such as light rail, through the tax hike. He would rather see lawmakers debate the core issues of infrastructure funding. He notes that revenue from New Jersey's extensive system of toll roads isn't being considered in the current debate.

New Jersey drivers pay 15.09?/USG less in gasoline taxes and 11.37?/USG in diesel taxes than the national average, according to data from API and the Energy Information Administration, but they are subject to tolls on many of the state's major highways, including the New Jersey Turnpike and Garden State Parkway.