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Congestion Pricing in Sweden

Today's Wall Street Journal has an article on congestion pricing in Stockholm. Before you dismiss this as some crazy socialist experiment read the following details from the WSJ:

- Fees vary depending on time of day. For example, between 6:30 p.m. and 6:29 a.m., drivers can drive into Stockholm at no charge. However, fees are imposed during the rest of the day and peak during rush hour:

6:30 a.m. to 6:59 a.m.: $1.38
7:00 a.m. to 7:29 a.m.: $2.07
7:30 a.m. to 8:29 a.m.: $2.76
8:30 a.m. to 3:29 p.m.: $1.38
3:30 p.m. to 3:59 p.m.:$2.07
and so on

- The Swedish government contracted with IBM to implement the system. Cars are tracked by reading license plates or by transponders.

- Traffic decreased by 22%.

- Accidents involving injuries fell by 5% to 10%

- Commute time during rush hour decreased by about one third.

- Use of all forms of mass transit increased by 6% and ridership on inner-city bus routes increased by 9%.

To read the article, click
here

Transportation reform is just as important as tax reform and education reform, and congestion pricing is a critical part of transportation reform. Congestion pricing encourages efficient use of transportation infrastructure which in the long run will allow the state to slow the growth in transportation expenditures.

The Utah Taxpayers Association has been advocating for the following transportation/transit reforms:

1. Prioritization of transit and transportation projects based on cost effectiveness of alleviating congestion (this would be ONE single list, not two separate lists).

2. Funding transit and transportation in one budget, not two, which forces projects to compete against each other based on prioritization.

3. Issuance of large bond to purchase transportation corridors for roads to be built in the next ten to twenty years.

4. Implementation of congestion pricing on new/expanded state highways.

Too bad the federal government won't let the states impose congestion pricing on existing road capacity. The Wall Street Journal article did mention a USDOT official as saying they would like to try something like this in the U.S. so maybe there's hope.

I noticed the article described large investments in transit that were needed to make congestion pricing work. For the pricing incentives to work, people need an alternative to driving into the city. Obviously, carpooling and working nontraditional schedules could help reduce peak congestion, too. Do you think the carpool lanes on I-15 have enough capacity to absorb the people needed to reduce our congestion? Personally, I think we're going to need more transit to make congestion pricing actually produce a decline in traffic.

Also, if Utah starts levying congestion fees, it's going to make your tax and fee burden ranking go even higher. How will you react to that?

You are right that large investments in transit would be useful, but it works both ways. Congestion pricing will make transit more practical. If we want to make the most out of existing and future transit lines, congestion pricing is a must.

Good question on the tax and fee burden. Congestion pricing is a fee so that would cause the total burden to go up. However, the bottom line is that we need to spend more money on transportation and transit. In the long run, we'll spend less in total taxes and fees if we use congestion pricing than if we were to rely solely on general tax increases (like the proposed sales or property tax for light rail.)

Btw, fees, tolls, and gas taxes should not be the only source of transit and road funding since an efficient transportation infrastructure benefits society in general. However, the more something is subsidized through general taxes, like sales taxes, the less efficiently it is used which means we'll end up spending more than we would have to.

This type of system would certainley fuel inflation. In the industry I am in (construction sales) I not only commute into my office every day I also leave and return to my office several times per day to look at new projects and check on ongoing projects. My crews also drive to multiple projects daily. If I have to pay $1 or $2 every time I leave my office and come back to it this will create a substantial bill for me to pay every month and greatly increase the cost of doing business. Besides the obvious burden of having to budget one more expense monthly I will have to pass this cost on to my customers by increasing the cost of their job.
In a growing community like we have my type of business is vital but will certainley have to pay an undo burden because of our needed mobility.

Raising taxes also fuels inflation, and if growth in vehicle miles traveled (VMT) is not slowed, we'll be looking at higher taxes. And then higher taxes after that.

Raising general taxes does not slow VMT growth, but congestion pricing will. In the long run, taxpayers will pay less if congestion pricing is implemented than if we just rely on general taxes.

Opponents of congestion pricing never look at the downside of the not implementing congestion pricing, which is continuously raising sales and other taxes.
From an overall economic perspective, the burdens imposed by continuously raising taxes to address congestion is higher than the burden of implementing congestion pricing.

Right now, there is no end in sight as to how high our taxes are going to be raised if we continue to ignore the need to slow the growth in VMT.

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