October 15, 2016
NJ PETROLEUM GROSS RECEIPTS TAX RATE INCREASE- UPDATE
The State of New Jersey has passed a law changing the NJ Petroleum Gross Receipts Tax. It is to be raised initially by 12.85% of the surveyed price average as of 7-1-2016.
The current plan calls for the implementation of an increase to the Petroleum Gross Receipts Tax on Nov. 1st. Initially, the PGRT on gasoline sold in New Jersey will change to 27c/gal, an increase of 23c/gal. This rate will be adjustable, changing as frequently as quarterly, as determined by Board of Public Utility surveys of the statewide pricing.
This initial increase is to also be applied to ‘floor stocks’, fuel volumes held in inventory at the time of enactment. Businesses will be required to take and report their inventory volume at the enactment of the tax increase, and then pay to the state the increased tax on fuel in inventory. Tanks over 10,000 gallons are to exempt the first 400 gallons and similarly the first 200 gallons for smaller tanks.
The increase on the PGRT for diesel has been broken into 2 parts- applying 70% of the increase (estimated at $0.1600/gal.) on Jan. 1 2017 and then the remaining 30% of the increase (estimated at $0.0700/gal.) on Jul. 1 2017. Stocks are expected to be ‘floor taxed’ at both implementation dates. This rate will also be adjusted as frequently as quarterly thereafter.
OFF ROAD DIESEL & HEATING OIL
NJ PGRT will no longer apply to most uses of off-road diesel (including- farm equipment, construction equipment, generators and most commercial fishing vessels) as well as commercial heating oil. Residential heating oil uses will continue to be exempted.
OTHER PETROLEUM PRODUCTS
The law raises the tax on other petroleum products like lube oils to 7% from 2.75%
We are awaiting clarifications from the NJ Dept. of Taxation on the exact rate increases.
Many thanks to The Fuel Merchants Association of New Jersey for their efforts keep us informed on the progress and details of this new legislation.