And that’s how tax policy is formed in New Jersey – under deadline based on dodgy numbers with no time (or inclination) for even the slightest review which, in this case, would show:
Raising the gas tax from 14.5 cents to 37.5 cents per gallon will likely cost the average New Jerseyan more than lowering the sales tax from 7 cents to 6 cents will save. Assuming 20,000 miles driven per year with a car averaging 15 miles per gallon it would come to an extra $307 which would be offset only if you bought $30,700 of items subject to sales tax. The story goes on:
The governor argued that “20 percent to 30 percent of the gas tax, by best estimates, will be paid for by out-of-staters” whereas the sales tax “affects all New Jerseyans.”
20%-30% of gas in New Jersey may be purchased by out-of-staters (highly unlikely) but, if so, will those truckers and New Yorkers keep going out of their way to pay for gas that will now be more expensive? And to make up that loss how many Delawareans can we expect to cross the bridge to take advantage of a 6% sales tax?
In the 2017 Governor’s Budget Summary the Motor Fuels tax is supposed to bring in $545,550. Raising this gas tax on Friday by 2.6% (37.5/14.5) would theoretically generate $865 million in extra revenue, but with less driving and fewer out-of-staters, that will likely drop to $800 million.
As for the sales tax, at 7 cents it has brought in:
The sales tax proposed is 6.5 cents as of 1/1/17 and 6 cents as of 1/1/18 so the cut in revenues would be about:
- FY17: $340 million
- FY18: $870 million
- FY19: $1.40 billion
Since the gas tax hike would all go into the Transportation Trust Fund this money will wind up being made up by either:
- raising other taxes
- not making the pension contribution
- cutting spending
with that last option included only as a concession to the rule of three.