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No one likes gas tax hike, but who has a better idea?

Category: General Taxes
Published: Saturday, 02 July 2016 08:53
Written by Super User
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Nobody wants to raise taxes.

State Sen. Steve Oroho doesnt want to raise taxes.

But he believes a hike in New Jerseys gasoline tax, the second-lowest in the country and unchanged since 1988, coupled with some tax restructuring, is more fair and preferable to what he terms a property tax explosion.

Oroho, a Republican from Franklin, is co-sponsor with Democratic state Sen. Paul Sarlo, of Bergen County, of legislation that would increase the states gas tax to 12.5 percent, which currently calculates to an increase of 23 cents per gallon. The actual tax would fluctuate with gas prices.

The goal of the proposal is to replenish the states Transportation Trust Fund, which is forecast to become insolvent this week.

That bill and an identical bill on the Assembly side have passed out of committees and could be brought to the floors of the Senate and Assembly for votes. Given that Democrats control both the Senate and Assembly and are generally in favor of the tax hike, approval could come as early as this week.

However, Gov. Chris Christie has signaled his opposition to the measure in its current form, and the Democrats would need some help across the aisle to mount a successful override of an expected veto.

Attempting to make the hike less egregious and attract more support, the proposal ties the increase to other tax reductions.

Most notable, and perhaps most controversial, is the eventual elimination of the estate tax, which is tagged a rich mans tax as it applies only to estates valued at $675,000 or more. Rationale for that change includes keeping the wealthy and their taxes from fleeing the state.

Other tempering facets of the proposed legislation include raising the retirement income tax deduction, increasing the earned income tax credit, and establishing a state income tax deduction for contributions to New Jersey charities that primarily provide health, welfare, or human care services to individuals in New Jersey.

Oroho says the trade-offs are a form of needed tax reform.

In particular, he points to the fact that about a third of the revenue from the state gas tax comes from out-of-state motorists, who would pay a share of any gas tax increase -- a more fair approach, as in a user fee. Absent that, the entire burden of paying for road and bridge maintenance that is not covered by the soon to be empty TTF would fall on already heavily hit New Jersey taxpayers. The explosion.

Opponents claim a gas tax increase would disproportionately impact working commuters who have no access to mass transit, which would include Sussex County, where about two-thirds of the workforce leaves for jobs elsewhere.

Additionally, some question whether the state, which is in a very deep financial hole, can afford to reduce any taxes in exchange for more gas tax revenue.

Without question, New Jerseys infrastructure is in need of some serious attention.

The Amerian Society of Civil Engineers, in its 2016 annual report card for infrastructure, gave New Jersey a grade of D-plus. Grades for 13 measured categories ranging from a B-minus for solid waste to a D-minus for levees and transit worked out to a GPA of D-plus. Categories specific to the TTF -- bridges and roads -- both received grades of D-plus.

But its not as though the civil engineers give glowing reports to any other states.

It should be noted that of the states measured so far by the ASCE, the highest grade given was a C-plus, achieved by Colorado in 2010 and Utah in 2015. The lowest was a flat D to Michigan and Tennessee for measurements in 2009.

In the same D-plus class with New Jersey were Arkansas, graded in 2014, and Indiana, graded in 2010.

Even so, the New Jersey report released this month said better than four in 10 of the states roadways are deficient, which means over 16,000 miles of roads are rough, distressed or cracked. Local motorists can quickly concur with that assessment.

Additionally, one in 11 bridges is categorized as structurally deficient.

Back to the state gas tax.

Those who believe they are getting a good deal with a relatively low gas tax and want to keep it low are being fooled, according to Oroho. Gas tax revenue is insufficient to pay for road and bridge maintenance, and the TTF is being propped up by the general fund, which falls on New Jersey taxpayers.

A plan that includes out-of-state drivers bearing part of the cost for state roads is logical, but is still a tough sell in a state where the gas tax is about the only thing less expensive than everywhere else.

Oroho is to be commended for putting forth a plan to address the states transportation needs, which are critical for its economic viability. In doing so, he has made himself a target of attacks and at odds with many in his own party.

Though not sold on the entire bill, Christie defended Oroho, saying, Some of the criticism of Steve quite frankly has been unfair.

In a radio interview Christie said Oroho sees all the money thats going from the general fund into transportation projects right now, that its only going to get greater and greater over time. Hes trying to correct a structural problem.

Many are quick to oppose any tax increase to ease the states transportation woes, but any alternative plans are in short supply.

Oroho, in touting his proposed legislation, repeatedly has said he was open to hearing any other feasible proposal.

Sadly, none has come forward.

Is the Sarlo/Oroho plan the best plan? At the moment, it seems the most viable.