Gas prices have risen in New Jersey over the past year, more than destroying any relief that motorists could see a few months ago when the state gas tax rate was slightly reduced.
But as gas prices rise amid the military conflict in Ukraine, it is too early to say how this could affect the overall collection of gas taxes, which play a key role in determining the taxes motorists pay every time they buy a gallon of gas in New York. Jersey.
The state gas tax rate is updated annually to ensure sufficient funding for long-term investment in transport infrastructure each year; until the next formal analysis of income data and consumption trends for a few more months.
The price of gas does not have a direct effect on how much New Jersey collects from the gas tax because it is levied as a volume tax per gallon and not as a percentage of an individual purchase, as is the case with the state sales tax .
But representatives of the Ministry of Finance also believe that the price factor cannot be ignored.
“Gas prices can be volatile, and changes in prices up or down can affect consumer behavior in a way that will indirectly affect the collection,” said Treasury Department spokeswoman Daniel Curry.
Motorists have reduced driving
And right now, motorists seem to be cutting back on driving in response to the recent rise in gas prices, says Sal Rysalvato, executive director of the Gasoline and Shops Association of New Jersey.
“Members have been telling me this for the last few months,” Rysalvata said in a recent interview.
According to data collected by the AAA, the average price of a gallon of gas sold in New Jersey last week exceeded $ 3.60, which was also above the national average for the week. Prices were even higher at service stations on Garden State Parkway and New Jersey Turnpike, according to data tracked by the New Jersey Office.
Rising gas prices According to the federal government’s consumer price index amid the coronavirus pandemic, headline inflation has risen 7.5 percent over the past year.
According to federal data, gas and fuel oil are among the categories that experienced the largest annual growth by the end of January.
New Jersey gas tax per gallon
But even as the price of gasoline has risen in recent months, including in New Jersey, the tax rate the state charges on every gallon of gas purchased by motorists is lower today than it was a year ago.
This is because on October 1, the gas tax per gallon was reduced by 8.3 cents to 42.4 cents. And for diesel, the rate per gallon was reduced to 49.4 cents. These rates are fixed by state law for at least a year.
This law, passed in 2016, linked New Jersey’s gas tax rate to annual consumption to ensure the state would have enough funds to properly maintain the state’s transportation system.
Revenues from the gas tax are used to fund the New Jersey Transport Trust Fund, or TTF, which is a separate account from the state budget that pays for road, bridge, and rail infrastructure improvements on an annual basis.
The 2016 law requires an automatic change in the gas tax rate each year to maintain a balance of planned transportation fund costs.
Under the rules set out in the law, state senior financial officials must conduct an analysis by mid-August each year to determine whether a surplus or deficit will be formed in line with the current gas tax rate. The rate should be increased to make up for any deficit, or reduced to prevent a large surplus. Any changes should take effect each year in early October.
Despite the reduction in the gas tax rate, which took effect last October, the overall rate has risen nearly 28 cents since 2016, when the state’s current transportation financing arrangement was created, according to an analysis by NJ Spotlight News.
Fifth place in the country
New Jersey gas tax per gallon Earlier this year, the American Petroleum Institute, based in Washington, ranked fifth among U.S. states.
Although this year’s revenue analysis is still a few months away, gas taxes were collected at or close to year-end growth targets for the first seven months of the current fiscal year from July to June, according to the latest data from the Treasury Department. Gov. Phil Murphy’s administration is expected to release new forecasts early next month, at the same time it opens the state budget for next fiscal year.
The best remedy for high gas prices, according to Rysalvat, are usually “high gas prices.” This is because high prices usually create less demand, which ultimately causes lower prices.
However, Russia’s decision to invade Ukraine could disrupt typical supply and demand patterns, given the role Russia plays around the world as an oil and gas producer.
“It’s a scam,” he said.
And for state-owned gasoline retailers – who have to pay for their supplies in advance and then try to recoup those costs through individual sales – rising prices can cut or even consume profits when stations compete for customers.
“There’s a reluctance to raise the price because you can’t be uncompetitive,” Rysalwata said.