Bill would give car owners tax refunds of up to $800 to offset gas prices

Car owners would benefit from tax breaks under a new bill aimed at relieving motorists struggling with petrol prices pushed up by supply chain constraints and disputes in Eastern Europe.

The bill, sponsored by Assemblyman Raj Mukherji (D-Hudson), would offer New Jersey residents a non-commercial vehicle registered in their name with tax rebates of between $400 and $800, depending on the number months they have lived in the state in a given tax year.

“Our motorists and commuters are recovering from the pandemic. They are facing high inflation, and with the price of gasoline, they just need a break,” Mukherji said in an interview.

Mukherji’s proposal would also create a fare holiday for NJ Transit users that would run from June through August and draw a significant portion of the agency’s revenue.

The bill sets aside $1.65 billion to pay for the rebates and reimburse NJ Transit for a portion of the cost of the fare vacation.

Gasoline prices in New Jersey averaged $4.38 a gallon on Friday, slightly higher than the national average of $4.28, according to AAA data. A year ago, the New Jersey average was $2.98.

Mukherji said his proposal was based on a $9 billion plan proposed by California Governor Gavin Newsom. The California Democrat’s plan would also create a three-month holiday on public transit fares and offer rebates between $400 and $800, but rewards would be based on the number of cars owned by a given filer, up to a two-vehicle limit.

It also recalls a repayment plan drafted by Senator Ed Durr (R-Gloucester). Durr’s proposal would offer residents $250 rebates for single filers earning less than $125,000 a year, with doubled rebates and income limits for joint filers. These rebates would be paid retroactively to 2021 tax bills.

A spokesman for the governor declined to comment on Mukherji’s bill, but the governor said in March that Durr’s proposal, which the senator says comes with a $1.9 billion prize , was “worth debating”. Mukherji said he has yet to speak to the governor’s office about his plan but hopes he will receive a positive response.

Assemblyman Raj Mukherji said he has yet to discuss the plan with the governor’s office, but hopes the administration will be “open-minded”. (Photo by Danielle Richards for New Jersey Monitor)

“I read in the papers that the governor was open-minded about another potential solution that when I heard about it would be more expensive and just a different way to go about it,” Mukherji said.

It’s unclear how much NJ Transit would lose in revenue from a three-month fare holiday. The agency expects to receive $766.2 million in fee revenue in the next fiscal year, according to budget documents.

Some of NJ Transit’s losses would be offset by a $150 million general fund appropriation included in Mukherji’s bill.

The rebates for car owners would be funded by a $1.5 billion credit, though Mukherji said he hopes the bill could be paid with unused federal aid.

About $3 billion of the approximately $6 billion in federal aid received by the state under the US bailout has yet to be allocated. Lawmakers have until December 31, 2024 to appropriate these funds, and they must spend them by the end of 2026.

Mukherji said he has yet to discuss the proposal with Democratic leaders in either house, and while those officials haven’t fully embraced the repayment plan, they won’t. have not ruled out either.

“I am carefully considering proposals to the Assembly,” Assembly Speaker Craig Coughlin (D-Middlesex) said in a statement. “With a focus on affordability this legislative session and knowing that New Jerseyans face challenges, we are thoughtfully exploring a host of legislative solutions to control costs across the spectrum.”

Plans to tackle rising gas prices

Although their chances of success appear to be the best, Durr and Mukherji’s bills are not the only proposals for gas price relief.

Sen. Shirley Turner (D-Mercer) introduced a bill that would impose a 60-day gas tax exemption reducing New Jersey’s per-gallon rate from 42.4 cents to 14.5 cents, but this The measure appears to have stalled due to fears that a holiday would deplete the Transportation Trust Fund, which is funded by gas tax revenues and pays for transit projects and roadwork.

A separate proposal, backed by the New Jersey Gasoline and C-Store Association, to allow self-service at New Jersey gas stations is also in legislative limbo. Senate Speaker Nicholas Scutari (D-Union) said in March he opposed the bill, citing public support for the state’s full-service mandate and lack of evidence that allowing free -service would reduce gasoline prices.

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