User-Fee’ Myth Busted; NJ Is Only State in Nation Where Taxes Subsidize Driving

NJPIRG Law and Policy Center


TRENTON – A new report released today by the New Jersey Public Interest Research Group (NJPIRG) disproves the common misperception that road-building is paid for by user fees, showing that gas taxes cover barely half the costs of building and maintaining roads, a fraction which is likely to fall steadily. 


Among the findings of the report:

·         While New Jersey is one of many states that exempts gasoline from the state sales tax, only in the Garden State does this amount of money diverted from the general fund exceed the value of state gas taxes. In other words, the state loses money for every dollar that gets spent on gas instead of other sales-taxable items.

·         Across the nation, highways, roads and streets have received more than $600 billion in subsidies over the last 63 years in excess of the amount raised through gasoline taxes.

·         The amount of money a particular driver pays in gasoline taxes bears little relationship to his or her use of roads funded by gas taxes. Drivers pay gasoline taxes for the miles they drive on local streets and roads, even though those proceeds are typically used to pay for state and federal highways.

·         Federal gasoline taxes were originally intended for debt relief, not roads.


“New Jersey needs to make difficult choices about how to fund our states’ troubled transportation system. With precious dollars at stake, the first task is to discard common myths about how roads are paid for,” said Jennifer Kim, Advocate at NJPIRG.

This past fall Governor Christie cancelled the ARC tunnel project, at the time the largest public transit investment in the country, due to fears of budget overruns. Later this spring New Jersey’s Transportation Trust Fund (TTF), which funds road repairs and transit, will run out of money.

 “This report clearly shows that NJ needs to take a strategic approach to reviving its transportation funding mechanisms, which means putting away the credit card and increasing revenue to meet our transit, and road and bridge repair and maintenance needs,” said Zoe Baldwin, NJ Advocate for Tri-State Transportation Campaign.

This year, Congress will again address funding for the nation’s Highway Trust Fund, which has been bailed out four times with $35 billion from general funds since 2008. Federal gas taxes have not increased since 1993 and revenues are expected to remain flat as Americans continue to drive less and use more fuel-efficient cars.

“Highway advocates wrongly label highway spending as financially conservative by falsely portraying gas taxes as “user fees” that pay for roads,” said Kim. “Funding programs based on myths instead of on what is most needed is wasteful and unproductive.”


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NJPIRG  is a statewide, non-profit, non-partisan public interest advocacy organization. For more information visit