Pump It Up: Group Calls for Higher NJ Gas Tax

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A gas station in New Jersey

New Jersey needs to raise its gas tax — or risk running out of funding for future road, bridge and transit improvements, according to a nonprofit policy group.

In a new report, New Jersey Policy Perspective says the state should extend its seven percent sales tax to gas, which would raise the price per gallon by 24.5 cents.

New Jersey drivers currently pay 14 and a half cents per gallon, making it the second lowest gas tax in the country after Alaska.

Most of New Jersey's tax goes to a special fund that pays for big transportation projects. But the fund, which has relied on borrowing for years, is running out of money

A state senator recently introduced a bill to raise the gas tax by 15 cents over three years. And a number of advocacy groups, including the AAA, have also called for an increase.

Because consumption taxes tend to be regressive, meaning low-income individuals have to pay a bigger proportion of their income, the group recommends expanding the Earned Income Tax Credit or enacting a new one to benefit those consumers.

But Governor Chris Christie has pledged not to increase taxes, including the gas tax.