Bill > S2821

Introduced Session

This bill would ensure greater tax fairness between the owners of gas powered vehicles and electric vehicles. Namely, the bill would establish an additional annual registration fee for electric vehicles, provide for a reduction in the State tax on highway fuels under both the Petroleum Products Gross Receipts (PPGR) Tax and the Motor Fuels Tax, and require the Department of Transportation to study and make recommendations concerning the dedication of alternative sources of revenue to the Transportation Trust Fund (TTF). Additional Annual Registration Fee for Electric Vehicles The bill first requires the Chief Administrator (chief administrator) of the New Jersey Motor Vehicle Commission to impose and collect an additional annual registration fee for each passenger and commercial electric vehicle in the State. Under the bill, the amount of the additional annual registration fee would be $300 for each passenger electric vehicle and $450 for each commercial electric vehicle during the fiscal years beginning on and after July 1, 2025. Notably, the bill requires all revenues derived from these additional registration fees to be collected by the chief administrator and remitted to the State Treasurer for deposit into the TTF. Reduction of Highway Fuel Taxes Next, the bill would enact a 33 percent reduction in the taxes imposed on highway fuels under both the Motor Fuel Tax and the Petroleum Products Gross Receipts Tax (PPGRT), collectively referred to as the "gas tax," beginning with State Fiscal Year 2025. The bill would also permanently extend the procedure by which the rate of tax imposed on highway fuels under the PPGRT is calculated. Currently, the Motor Fuel Tax is fixed at 10.5 cents for gasoline and 13.5 cents for diesel fuel, and the PPGR tax is set at 31.8 cents for gasoline and 35.8 cents for diesel fuel. The Motor Fuel Tax on gasoline would be lowered from 10.5 cents to 7 cents per gallon, and the motor fuel tax on diesel would be lowered from 13.5 cents to 9 cents per gallon. The motor fuel tax on liquefied petroleum gas would likewise be lowered from 5.25 cents per gallon to 3.5 cents given that the tax rate for these products are set at one-half of the tax imposed on gasoline. Under current law, the tax rate imposed on highway fuels under the PPGRT is annually adjusted by the State Treasurer to ensure that the State realizes a statutorily prescribed revenue target. All revenues collected are deposited into the TTF to support transportation infrastructure projects and debt service on transportation bonds. This annual adjustment mechanism is currently set to expire at the conclusion of State Fiscal Year 2026. This bill would permanently extend this annual adjustment mechanism. The bill also reduces the rate of tax imposed on highway fuels under the PPGRT by lowering the statutorily prescribed revenue target, also referred to as the "highway fuel cap amount," by 33 percent. The highway fuel cap amount is based on State Fiscal Year 2016 sum of: (1) the taxes collected on the 12.48 percent and four cent tax rates for highway fuels taxes, (2) the amount derived from taxing the gallonage of highway fuel subject to the four cent motor fuel tax, and (3) the amount that would have been derived from taxing the gallonage of highway fuel subject to the motor fuel tax at a rate of 23 cents per gallon. To ensure adequate funding for the TTF, the bill would require the State to annually appropriate from the General Fund such amounts as are necessary from the revenues collected under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.) into the TTF to support all debt service obligations of the Transportation Trust Fund Authority's (TTFA) for the current year. Alternative Revenue Feasibility Study Finally, the bill requires the Department of Transportation (department), in consultation with the TTFA and the Office of Revenue and Economic Analysis in the Department of the Treasury, to study and make recommendations and a repot concerning the dedication of alternative sources of revenue to the TTF. These revenues may be necessary to offset future revenue reductions from the Motor Fuels Tax (MFT) and the Petroleum Products Gross Receipts Tax (PPGRT) due to the decreased consumption of gasoline, diesel, and other highway fuels. The purpose of this study will be to identify one or more sources of revenue, other than the Motor Fuels Tax and the Petroleum Products Gross Receipts Tax, that may be relied upon to fund the TTF in future years. At a minimum, the report would be required to: (1) analyze the feasibility of dedicating alternative sources of revenue to the TTF; and (2) make recommendations for the dedication of alternative sources of revenue, other than the MFT and the PPGRT, to the TTF. No later than August 31, 2026, the department is required to submit the report to the Governor and the Legislature as well as publish an electronic copy of the report on the department's official Internet website.

Committee Categories

John Burzichelli (D)*,  Paul Moriarty (D)*, 

Introduced in the Senate, Referred to Senate Transportation Committee (on 02/27/2024)

Official Document