N.J. loses money with gas tax rates | Economy | NewJerseyNewsroom.com -- Your State. Your News.

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N.J. loses money with gas tax rates

gaspumps030411_optBY ADELE SAMMARCO
NEWJERSEYNEWSROOM.COM

It’s no secret residents from surrounding states drive to New Jersey to fill-up their gas tanks for less than what they would ordinarily pay in their own state.

But according to a new report, the Garden State is losing money each year for not increasing its gas tax rates to keep pace with rising transportation and construction costs.

New Jersey hasn’t increased its gas tax rate in 23 years and because of that, the Institute on Taxation and Economic Policy says the state leaves behind more than $500 million on the table every year.

According to the Institute’s report, “Building a Better Gas Tax,” New Jersey’s gas tax rate has fallen by 40 percent over the last two decades.

And New Jersey is not alone. The report shows the average state has not increased its gas tax rate in over a decade, where 14 states have gone 20 years or longer without an increase.

But while New Jersey’s gas taxes remain the same, the cost of repairing roads and building bridges has risen significantly nearly every year, often, most economists say, at a rate higher than general inflation.

In a press release issued by ITEP, the author of the study calls the findings, “basic math”.

Senior ITEP Analyst Carl Davis said in a statement, “The road repairs you could buy in 1990 with 20 cents, for example, are going to cost 34 cents today. But we still see some states collecting the same flat 20 cent tax that they did back in 1990. That’s the definition of unsustainable.”

NJToday reports New Jersey charges 10.5 cents per gallon of gasoline, and 13.5 cents per gallon of diesel fuel. Including the federal gas taxes, New Jersey’s 32.9 cents per gallon rate is the third lowest overall gas tax in the country. The diesel rate, at 41.9 cents per gallon, is the sixth lowest overall rate.

In his report, Davis offers specific policy recommendations for modernizing the state’s gas taxes:

• Increase gas tax rates to (at least) reverse their long term declines. The appropriate contemporary rate for each state will depend on transportation funding needs as determined by lawmakers and the public.

• Restructure state gas taxes so that their rates rise automatically alongside the inevitable growth in the cost of transportation construction projects. If every state had restructured the last time it raised its gas tax, total state gas tax revenues would be over $10 billion higher per year.

• Create or enhance targeted tax credits for low income families to offset the impact of gas tax reform.

Analysts believe the state gas tax has eroded over the years, causing disastrous effects on the nation’s transportation and infrastructure. They say $10 billion in gas tax revenue is lost each year, which plays a large role in the U.S. economy.

The American Society of Civil Engineers (ASCE) estimates a $10 billion drain on the economy in the form of higher vehicle repair costs and travel time delays. And according to the findings, believe these costs can greatly be reduced if lawmakers raise sufficient revenues for state roadways and transit systems.

 

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