Why Paying More In Gas Tax Isn't The End Of The World

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Well, it figures. My office moves to Orangeburg, NY, I now need a car to get to work....and gas prices raise dramatically. But, i'm OK with this. 

The word came out this week that NJ was raising taxes for gasoline by 23 cents per gallon.
 People, of course, freaked out, but didn't read this part...that the sales tax was lowering from 7% to 6% (yes, it should be noted this is over 18 months).

Let's play a game. You live in NJ. You spend $1000 a month on any purchases in NJ (other than groceries, household paper products, medicine, and clothing, which isn't taxed). The taxes on $1000 is $70 at the current 7% rate. Lowering it to 6% means you pay...$60 monthly. You save $10 a month.

Let's keep playing this game. You live in NJ. You fill up your car 3 times a month. You spent $1.99 at Speedway for your cheap gas and your car has a 15 gallon tank. You fill it up 14 gallons each time (you don't roll into the gas station empty, do you?) and pay $83.58 a month. With our new tax, you will pay $93.24 ((14x3)x($2.22)). The difference? $9.66.

Lets finish this game. The money you save from retail spending will likely offset the costs of paying for gasoline. The people who "lose" this game are drivers from outside of NJ who travel through our state, using our roads and bridges. Or people who live on the borders of NJ like PA and NY who only come into NJ to fill up their gas tanks, also clogging our roads. 

Remember my example was only on $1000 a month. Bigger families who spend more money on NJ sales monthly will see a big difference in their collective wallets.

The money from the increase in gas taxes, in part, will go towards the state's Transportation Trust Fund, which will lose its borrowing authority by the end of the month and is estimated to run out of money by early August. No one likes more taxes, I get this. I'm not cheering on raising taxes. But people are forgetting that sales tax is actually lowering, and to me there is a lack of proper journalism when all the click bait, sensationalist headlines all talk about the tax on gas going up.

I read a recent comment which said, "But if the price of gas goes up...the price to ship goods goes up...the price of food and other items will skyrocket!"

That's horseshit. We are talking about pennies on the dollar increases and dealing with shipments from large trucks carrying large supplies. To go back to our old analogy if you have a beer truck shipping 500 cases of Bud Light to pubs in Hoboken and it costs $97.51 to fill up a truck (lets say it has a 50 gallon tank, but you fill up 49 gallons) with gas at $1.99 per gallon versus $2.22, which is $108.78. Difference per truckload is $11.27. Each case would cost $.022540 more! Oh the humanity!

The people who will be paying are those who are using the road. Yes this will include people from NJ and everyone else who drives through our state and fills up their tanks at our gas stations.

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This page contains a single entry by Furey published on June 29, 2016 12:47 AM.

Top 5 Ways To Fix Hoboken Traffic and Parking Issues was the previous entry in this blog.

Why Not Extend Harbor Blvd To Clinton Street? is the next entry in this blog.

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