The state Motor Vehicle Commission has implemented new fees for anyone registering a zero emission vehicle (ZEV). For the current year that fee is $250, in addition to the normal registration fee. The amount will increase $10 a year for the next four years, culminating in a $290 annual fee in 2028.
On March 26 Gov. Phil Murphy signed a reauthorization of the state’s Transportation Trust Fund that both increased the state’s gas tax levy and imposed the new fee on ZEVs. The annual additional ZEV fee was part of the state’s plan to ensure that non-gas-powered vehicles that use the state’s roads and bridges pay their fair share into the trust fund. The ZEV fee is roughly the amount that the owners of gas-powered cars pay in gasoline tax each year.
The bill Murphy signed raises the target tax levy from its current $2 billion gradually to a maximum of $2.37 billion by July 2028. Legislative analysts say that increases each year toward that goal will result in an annual hike of about 2 cents per year in the state gas tax. The annual increase in the gas tax levy will be matched by the annual increase in the ZEV registration fee.
The Office of Legislative Services estimates the new ZEV fee will bring in about $61.3 million in the fiscal year that began on July 1, when the fees went into effect.
In a July 3 letter to ZEV owners, the Motor Vehicle Commission discussed the newly added fee, explaining that in addition to the $250 one-year fee, buyers of new ZEVs must now pay the registration fee in advance for four years out to 2027, including the expected $10 annual increase, at the time of purchase. That adds $1,060 to the cost of purchasing a new ZEV in the Garden State.
A Fairleigh Dickinson University poll released in April showed most New Jerseyans, 65%, approved of the new fees imposed on ZEVs to support the trust fund. The poll showed strong support for a ZEV fee by both Democrats and Republicans.
But there has been opposition to the new fee structure as well.
ChargEVC, a trade organization that promotes ZEVs, said the fee is “punishing owners who go green.” The organization claims that New Jersey’s fees make the “tax” on ZEVs the highest in the nation. They argue that while ZEV owners should pay their fair share into the Transportation Trust Fund, New Jersey is acting prematurely and should wait until ZEVs have greater penetration and comprise at least 5% of all vehicles on the road.
Jim Appleton, president of NJ CAR, opposes the four-year upfront payment for new ZEVs, saying it makes the cost of ownership of a ZEV among the highest in the nation.
Another state action that affects the cost of ZEVs is the phaseout of the sales tax exemption that formerly applied to the purchase of ZEVs. Under the law Murphy signed on Friday, June 28, starting Oct. 1 all sales of ZEVs will be subject to a sales and use tax of 3.3125%. After July 1, 2025, all sales of ZEVs will be subject to the full sales and use tax amount of 6.625%.
Murphy has mandated that, by 2035, all new vehicles sold in the state must be zero-emission. This means New Jerseyans can expect more volatility in the tax and fee structure based on the pace of the transition. The state’s gas tax rises and falls depending on the ability of the revenue stream to meet state-imposed target levies. Faster or slower transitions from gasoline-powered vehicles will affect the levy.
Some good news on the ZEV front comes from Bloomberg News, which says that charging stations are now getting busy enough to start making money. Bloomberg predicts that the current pace of charging station implementation means that public fast-charging stations will outnumber gas stations in the U.S. in about eight years. Bloomberg’s estimates are based on U.S. Department of Energy data.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.