The New Jersey Assembly approve a 23-cent per gallon hike for the state’s gas tax early Tuesday morning, along with a one-cent reduction in the state sales tax that would be phased in over 18 months.
If State Sen. President Steve Sweeney posts the bill and it is approved by the Senate, the gas tax increase could take effect as early as Friday. Senators on Tuesday said they were unsure whether they would support the deal Gov. Chris Christie struck with the Assembly.
The sales tax cut was a last-minute addition to a tax plan that has been debated for months. Some of controversial original proposals that were part of the plan, including phasing out the estate tax, were cut and a reduction in the sales tax was added in negotiations with Christie.
The 1-cent sales tax reduction would cost the state an estimated $1.3 billion in revenue annually. The sales tax would drop to 6.5 percent on Jan. 1, 2017, and drop to 6 percent on Jan. 1, 2018.
The assembly vote was 53-23. Local assembly members Andrew Zwicker and Jack Ciattarelli voted against the plan. Assembly members Reed Gusciora and Liz Muio voted for it.
“This is the first broad-based tax cut for all New Jerseyans since 1994. I think it was needed, necessary,” Christie said of the plan.
The gas tax hike is projected to cost drivers and fliers about $1.4 billion annually. The money would help fund about 2 billion a year for roads, bridges and rail projects in the state. The state’s Transportation Trust Fund has run out of money and the additional tax would replenish it.
As part of the tax plan, taxes on retirement income would change over four years. Currently a married couple can exclude $20,000 in retirement income from taxes and a single person can exclude $15,000. The threshold would increase to $100,000 for married couples and $75,000 for individuals starting in 2020. Taxpayers with income between $100,000 and $150,000 would become eligible for partial exclusions — 50 percent if their incomes are $100,000 to $125,000 and 25 percent if it is between $125,000 and $150,000, starting in 2021.