Another Plan.Another Tax Hike
Posted February 18, 2008

The ongoing toll hike debate remains the top news story in New Jersey politics, and this week, another voice was added to the fray.

The left-leaning New Jersey Policy Perspective (NJPP) offered its suggestions for helping solve New Jersey’s fiscal crisis, and, not surprisingly, they boil down to taking your money to fund Trenton’s fiscal mismanagement.

The title of the NJPP’s report, “Gas Tax Talk Leads Down the Right Road,” says it all.  Anytime “taxes” and “right road” appear in the same sentence, taxpayers’ wallets are the prime targets.  And NJPP’s proposal is no different.

Authored by NJPP Research Director Mary E. Forsberg, the report encourages the discussion of hiking the state’s gas tax as a means of increasing state revenue without additional borrowing. Forsberg writes, “[T]he gas tax and other revenue sources … should be part of a comprehensive plan. Their use would help to provide adequate funding for today’s needs and make sure the state invests in its own future. They would produce about $2.8 billion a year in new revenue and involve no borrowing by the state.” (first emphasis added)

What are these “other revenue sources?” They are none other than a new sales tax on gas, increased motor vehicle registration fees, increased drivers’ license fees, and increased energy conservation fuel fees. 

Forsberg contends that New Jerseyans currently pay the third-lowest gas tax in the state, at 14.5 cents per gallon. While most would view this as a point of pride, to Forsberg, it is a “false savings” that must be eliminated – false “[b]ecause the Transportation Trust Fund the state established in 1984 to assure adequate funding for roads and mass transit is running on empty.”

In addition, Forsberg points to the fact that the last time New Jersey increased the state gasoline tax was 1988, and, before that, 1972.  Comparably nearly every other state has raised its gas tax in the past 20 years, including several neighboring states in the past six years. (This begs the proverbial questions, if everyone else jumped off a bridge, would you, too?)

To get to the nitty gritty, then, Forsberg recommends the following: (And just to clarify things lest anyone claim differently, every time the word “increase” or “institute” appears, government’s hand digs even more deeply into taxpayers’ pockets.)

1. Increase the state gas tax by as much as 20 cents per gallon, a move that Forsberg says “would generate approximately $1 billion each year.”
2. Institute a sales tax on gasoline. This would be in addition to the state gas tax. According to Forsberg, “This makes sense from a revenue standpoint…. [A] sales tax is responsive to changes in the price that oil companies charge for a gallon of gas. When a tank of gas costs $30 instead of $20, a 7 percent sales tax generates $2.10 instead of $1.40…. If a gallon of gas costs $3, applying the sales tax would raise about $900 million a year in New Jersey.”
3. Increase motor vehicle registration fees. Forsberg notes that, currently, fees “are based on the age and weight of a vehicle.” She writes, “Doubling the fees on newer cars weighing less than 3,500 lbs. and tripling fees on cars weighing more than 3,500 lbs. would increase motor vehicle fee revenue by $480 million a year.” This recommendation builds on a 2002 NJPP report recommending that “fees be increased to more accurately reflect owners’ ability to pay, given that newer, more expensive cars are more likely to be owned by higher income persons.” Ah, yes, a progressive car registration fee system…this is about as pro-family as the progressive income tax.
4. Increase the energy conservation fuel fee. Many New Jerseyans may be unaware that this fee even exists, but it does – thanks to a 2006 state law which instituted a 4/10 of a percent fee on new luxury and fuel inefficient passenger vehicles, “luxury” being defined as costing $35,000 or more and “fuel inefficient” describing those vehicles with an average fuel efficiency rating of fewer than 19 miles per gallon.  Forsberg writes, “This tax resulted in a $180 fee per vehicle, which was expected to yield about $25 million in revenues annually for the state.” Yet, despite the initial levy, according to Forsberg it was not enough! She writes “Increasing the energy conservation fuel fee to 2 percent on cars costing $35,000 and up would generate about $145 million a year.” The stated reason for the $35,000 threshold is that “[l]arge, expensive fuel-inefficient cars tend to be owned by higher-income taxpayers; [and] these vehicles disproportionately cause wear-and-tear to highways, increase pollution and deplete energy supplies.”  (Interestingly, we would argue that the hot air blown by tax and spend liberals disproportionately pollutes public debate, but we doubt anyone would support a liberal air excise fee.)
5. Increase drivers’ license fees.  Forsberg recommends doubling the state’s 4-year drivers’ license fee, from $24 to $48.  She writes that such a move would “raise an additional $340 million a year.”

Interestingly, in the NJPP’s six-page report packed with suggestions for hitting New Jersey’s wallets, one phrase that appears nowhere is “reduce spending.”  In fact, the word “spending” doesn’t appear at all!

New Jersey Policy Perspective’s recommendations are bad news all the way around. No number of tax hikes or fee increases is going to solve the problem of waste and mismanagement in the halls of Trenton. We’ve said it repeatedly, and we’ll say it again.  It’s time for the governor and state legislators to act responsibly, cut spending, and stop looking to taxpayers to bail them out.

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