The New Jersey Legislature is preparing to vote on raising the gas tax 23 cents Wednesday in an effort to help the state pay for road, bridge and transit work.
The vote has been a highly controversial one for New Jersey residents, many of whom have to commute to New York and Philadelphia for work. If passed, the proposal will raise New Jersey’s gas tax from 14.5 cents to 37.5 cents a gallon.
The gas tax increase proposal is a bipartisan agreement between Democratic leaders and Republican Gov. Chris Christie. New Jersey residents and those traveling in and out of the state are upset about the tax increase.
Here’s a breakdown of how the gas tax increase proposal came to be and what it will mean to you:
What will the gas tax increase do?
The proposal is to raise New Jersey’s gas tax from 14.5 cents to 37.5 cents a gallon. Currently, New Jersey has the second lowest gas tax in the country — behind Alaska.
Even with a 23-cent increase, New Jersey will still have a lower gas tax than Pennsylvania and New York.
Why is the gas tax being proposed?
State officials said they don’t have enough money to do critical infrastructure projects. The proposal comes for a vote three months after the state’s transportation trust fund expired and amid a shutdown of transportation projects ordered by Christie.
Authority for the fund to pay for transportation work ran out without a deal in place to secure capital projects
How will the gas tax increase fund infrastructure projects?
The deal would establish a $2 billion-a-year transportation trust fund over eight years. In the past, the transportation fund has been supported by $1.6 billion yearly allocation.
Does the proposal have any other measures?
Yes. Lots of them.
Aside from raising the gas tax, the proposal would also cut the sales and estate taxes. It would also offer veterans and low-income residents tax credits,
The sales tax would go from 7 percent to 6.875 percent by January and to 6.625 percent by July 2017. The legislation would also phase out New Jersey’s estate tax, changing the threshold from $675,000 to $2 million in 2017 and eliminating it completely in 2018.
The deal also includes raising the earned income tax credit, which helps low-income residents, from 30 percent to 35 percent for the current tax year, as well as increasing the tax exclusion on retirement income over four years to $100,000 for joint filers. Veterans would get a personal exemption for state income taxes under the measure.
Why should I care?
Anyone traveling through New Jersey could always count on cheap gas — often 30 to 50 cents cheaper than Pennsylvania. But that gap could be closing with the new measure.
The average price for a gallon of gas in New Jersey is $2. The new tax will raise that prices to $2.23.
The Associated Press Contributed to this story.