Policy Origins
Stockholm, the capital city of Sweden, first initiated a congestion tax in 2005 to curb the heavy traffic problem. The policy was introduced by the Green Party and Social Democrats in the city2.The four main objectives of the tax were the following (as taken from the policy proposal presented at the International Conference for Transport Management1):
– Reducing the traffic volume on major roads at peak hours.
– Improving accessibility for buses and cars in the city.
– Reducing CO2, NOX, and other emissions.
– Improving the overall quality of the city.
Tax Coverage
When I was looking up policies pertaining to congestion and traffic size in Canada, I found out that there aren’t many regions where such a policy is in place. Moreover, one reason that Canadian policy makers do not have consensus on a road congestion policy is because there are always conflicts over coverage. There are also questions raised over the difficulty that is faced in regulating such policies. However, in the case of Stockholm, policy makers chose the simplest method of pricing by setting up toll centers on the entrances and exits of the city.
How Tax is levied?
The quantity of tax was variable and it was different for different times of the day. The times of the day when the tax is in place are the following: 6:30 am to 6:30 pm. The exact details of the tax are depicted in the chart below (also taken from the International Transport Conference1). Amount of congestion tax is given in the Swedish currency, SEK.
Moreover, the tax was exempted for emergency vehicles, like ambulances, while commercial vehicles were asked to pay a flat rate of 60 SEK. The tax rates in the table above were deduced by finding out how much it costs transporters to make two way trips in and out of the city1.
Distribution and Cost/ Benefit Analysis
Often, when policy makers are faced with the decision of implementing something new and controversial, they choose to opt for a policy that is revenue neutral, to avoid the wrath of their citizens. Similar was the case in British Columbia, Canada, where revenue neutral carbon pricing was introduced to buffer the impacts of the policy. The municipal government of Stockholm chose a similar method, and declared that the revenue from the congestion tax will be used to invest in other transit projects. Thus, in effect the tax has been pro-poor, as in the long run it will enable the government to build better transit systems for citizens who cannot afford the luxury of a car and rising fuel prices. Secondly, it is also better for the overall economy as a congestion tax will lead to lower road accidents, improved environmental quality, and lower emissions. The policy will ease off some burden on other sectors and resources can then be channeled to social programs where they are needed the most.
However, there were significant operating and start-up cost associated with the project. Although, it can assumed – based on discussion earlier – that the costs will be recuperated due to high compliance, it does signal the difficulties that the law makers would have faced to introduce this regulation. The implementation costs included 1.3 billion SEK in the construction of tolling systems, whereas around 2 billion in other transit and traffic related operations2.
Effectiveness of the Policy
Stockholm’s tax policy proved to be very effective and it now acts as a model for cities elsewhere, which are aiming to implement such regulations. As indicated in the AASHTO evaluation report released in April 2010, the city achieved its’ goals of demand management by meeting the objectives – also discussed above – that they had set out to achieve2, 1. The report further concludes that the transit usage saw a growth of 6 to 9 percent, congestion decreased by 20 percent, and the emissions were reduced by 10 to 14 percent2.
Success Stories/ Lessons for Canadian cities/ Personal views:
I had initially intended to comment on the traffic congestion policy in Toronto, Ontario, which has one of the worst traffic congestion problems in North America3. However, to my surprise there were no policies or proposed regulations that addressed this issue. Apparently, law makers are concerned about the chaotic regulation associated with a road pricing policy. This clearly shows that not much will is there to curb traffic congestion because had the policy makers analyzed the Stockholm road pricing model, or any major European city for that matter, they would have seen the relative ease with which a road policy can be implemented and how effective it could be. However, the environmental commissioner for Ontario needs recognition in this regard as he has been staunchly supporting a road pricing with little backing from any other elected official.
All in all, Stockholm’s congestion tax is well regulated and it has been supported staunchly by the citizens. The tax now acts as a model for other cities around the world who are trying to effectively manage their traffic demand.
* 1 SEK = $0.16 CDN.
References:
1http://www.internationaltransportforum.org/IntOrg/ecmt/taxes/pdf/London04Dickinson.pdf
2 http://international.fhwa.dot.gov/pubs/roadpricing/roadpricing.pdf
