Traffic congestion is an agglomeration of vehicles on a road, which makes difficult for the vehicles to move with a normal speed. As a result the trip time increase, consume of gasoline and CO2 emissions also increase, resulting in higher personal and social costs. The start point of traffic congestion is the high demand in the pick hours for that particular road, which can be a street in a city centre, or a bridge which link a city with residential areas, etc. In order to reduce the congestion, and therefore the demand for that road to decrease, taxes or tolls could be imposed. [1]
For a better understanding of the traffic congestion reduction, how it works, who is the tax affecting and how the revenues from the tax are used, I will look at one of the major cities who already applied it: Stockholm. In the end I shell draw some conclusions regarding the effectiveness of that policy.
Political origin of the tax
Stockholm congestion tax (named also congestion charge) was permanently implemented in August 2007, after a 7 months trial period. At first the tax was voted in a referendum and approved by the majority of Stockholm’s residents and even though other 14 surrounding municipalities were against making the tax permanent, the party on charge declared the congestion tax permanent and the parliament approved it a few months later. [2]
Coverage and implementation of the tax
The vehicles that are driven into and out of the city centre of Stockholm during weekdays from 06:30 to 18:30 have to pay a tax through payment stations installed on the streets at the control points. This payment stations only register the passing into or out of the restricted area and no payments are made here. The tax is applied only to Swedish-registered vehicles. After the end of one month (month 1), the owner of the car receives a slip (bill) from the Swedish Transport Agency with all the passages the car made previous month and he/she had to pay the tax until the end of the following month (month 3). In case that the owner does not receive a slip, he/she is still responsible for the payment of the congestion tax; otherwise an extra fee will be added. [3]
Official sign of the “Road toll” in Stockholm
Source: http://en.wikipedia.org/wiki/Stockholm_congestion_tax
Vehicles covered by the congestion charge: only the Swedish-registered vehicles.
Vehicles automatically exempted from the congestion charge – as stipulated on the Swedish Transport Agency website:
- “emergency vehicles
- buses having a total weight of at least 14 tonnes
- diplomat-registered vehicles
- motorbikes
- foreign-registered vehicles
- military vehicles
- vehicles that according to details contained in the Swedish Road Traffic Registry of the Swedish Transport Agency are equipped with technology for being run:*
a) completely or partly on electricity or a gas other than liquefied petroleum gas (LPG), or
b) on a fuel blend that predominantly comprises alcohol.
*This exemption applies up to and including July 2012 for vehicles that were entered in the Swedish Road Traffic Registry prior to 1 January 2009. Vehicles entered after these dates are not exempt from congestion tax”. [3]
The persons who have a Disability Parking Permit can be also exempt from the congestion tax if they submit an application to the Swedish Tax Agency and if they do not use the car for professional purposes. [2]
Distributional effects of the tax
The tax impacts equally the poor and the rich owners of Swedish-registered vehicles when or if they need to drive into the city center.
But, for the Swedish that can afford to buy a green car, the tax will have no impact. If they need to drive often in the city center, they might consider choosing to buy a green car and not having to pay the congestion tax after that.
Use of revenues from the tax
For the 7 months trial period, the revenue collected went into Stockholm’s public transport. After the tax was permanently implemented, the revenues were redistributed in the constructions of the roads in and around Stockholm.[2]
In my opinion, when the revenues were invested in the public transport, the poor which are supposed to use more frequently public transportation could benefit more from that redistribution of the congestion tax.
Effectiveness of the policy
Regarding the effectiveness of the policy, there are numerous studies on the internet analyzing the policy. One of them, from which I am going to subtract the main ideas, is “The Stockholm congestion charges—5 years on. Effects, acceptability and lessons learnt”, 2011. The authors – Maria Borjesson, J. Eliasson, M.B. Hugosson and K. Brundell-Freij are from the Centre for Transport Studies, Sweden.
First of all, there was an unexpected support from the Stockholm’s residence to introduce this congestion tax. This could have had many reasons: the fact that other similar taxes where already introduced in other big cities, etc.
The traffic reduction varies over time, but in the long run the tax achieved its scope of reducing the traffic in the pointed area with approximately 30%.
The percentage of green cars exempted increased from 2% in the trial period of 2006 to around 10% in 2011. Green cars are exempted from other traffic or pollution tax, so the increase in the number of these cars is explained and motivated.
In the future, the number of cars is expected to increase due to the increase in population, but this problem could be solved by decreasing the demand with a higher congestion charge in order to maintain a certain level of traffic.[4]
Conclusions
In my opinion, Swedish tax of reducing congestion in the center of Stockholm city achieved its purpose of reducing the traffic and the CO2 emissions by having less cars driving in the city center and, in the same time, by increasing the number of green cars which helps reducing pollution overall.
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