Stop NYC Congestion Tax

What is Congestion Pricing?

Congestion pricing, or a congestion tax as it is better called, is a double-dipping tax commuters pay to the government for simply driving on roads already created and maintained by taxpayer funds.

The tax is charged regardless of the reasons for which you choose your vehicle to commute, such as family reasons, doctors appointments for ill relatives, personal or business affects that can only be reasonably transported by car, because you have no other viable alternatives, or simply because it makes your life easier and more efficient.

It is an attempt to generate more revenue for government at the expense of people without better options, hoping that they will resign themselves to paying the tax, taking a less convenient mode of transportation, or finding a job/school/doctor elsewhere. All of this is done with the rhetoric of Big Brother government attempting to modify your “bad” behavior by punishing your wallet while it raises more money for itself.

Where Do Congestion Taxes Exist?

Several places throughout the world employ some form of variable road taxes, but the most notable are in London and Stockholm.

London

London’s congestion charge was authorized by the British Parliament in 1999, long before there were any public discussions on implementing such a tax. In 2003, the Mayor of London, Ken Livingstone authorized the implementation of a tax, which started at £5 a day (~$10 per day/~$2,400 a year) for driving within a 8 sq. mi. Tax Zone in central London. In 2005, the tax was increased to £8 a day (~$16 per day/~$3,840 per year). In 2007, the Tax Zone was doubled to 15 sq. mi. in size, and there’s been talk of yet another increase to possibly £10 a day (~$20 per day/~$4,800 per year) in 2008. The public hearings held throughout the course of all major developments in London’s Congestion Tax program elicited large public opposition. Now, because of the tax revenue, other cities in England are planning to implement congestion taxes, despite increased public opposition. Beyond that, though the proceeds for congestion taxes go into public transportation, fares for public transportation continue to rise.

Stockholm

Stockholm’s congestion tax is less financially punitive, but more politically troubling. In 2006, Stockholm conducted a 7-month experiment with congestion taxation between January and July of that year. The tax, which varied between $1 to $3 in price based on the hour one traveled into the city, would only be assessed once crossing the tax perimeter around the city. There was no charge for driving only within the perimeter. After the trial period expired, where no charge would be assessed until a decision was made by the Swedish government in 2007, a referendum was held to poll the residents of Stockholm. Though not required by law, about 14 municipalities surrounding Stockholm also conducted referenda about congestion tax. The Stockholm referendum resulted in 52% of voters supporting it, and 45% opposing it. The other 14 municipalities voted against it at 60%. 2006 was also a national election year for the Swedish parliament. The current governing center-left coalition, the Social Democrats, government promised to abide the results of the referendum held within Stockholm; the challenging center-right coalition, Alliance for Sweden, promised to abide by the results of all the referenda.

The Alliance for Sweden defeated the Social Democrats. However, on October 1, 2006, contrary to their promises, they announced that they would reintroduce the tax despite the voters’ mandate against reintroducing the tax. In fact, all but one of the parties that made up Stockholm Council’s newly elected center-right majority (affiliated with the successful Alliance for Sweden) under Mayor Kristina Axén Olin voted to oppose reinstating the congestion tax. However, instead of going to fund mass transit, the funds–for now–are directed to major road improvements instead, so as to give drivers a sense that their money went to directly and positively enhance their commute by car. In 2007, after the charge had been reintroduced, fares for public transportation were increased.

PlaNYC 2030’s Tax Folly

New York City Mayor Michael R. Bloomberg (Unaff.) introduced a congestion tax plan to attempt to modify your personal lifestyle, as part of his larger PlaNYC 2030 initiatives for “improving” New York City by 2030. His plan as described originally in April 2007 consisted of the following:

• From Monday to Friday, 6 AM to 6 PM, all commuters driving into or out of Manhattan south of 86th Street would be taxed initially $8 a day, or $2,000 a year for their commute. Those driving only within the Tax Zone south of 86th Street would be charged $4 a day, or about $1,000 a year. Trucks crossing between the Tax and Tax-Free Zones would be charged $21 a day, or about $5,500 a year, and those only driving within the Tax Zone, would be assessed a tax of $5.50 a day, or about $1,300 a year.
• EZ Pass readers and cameras set up throughout the Tax Zone would determine whom to charge the tax.
• Driving on the FDR and West Side Highway would not be a taxable action.
• The primary goals of the tax would be to punish individuals driving into Manhattan to work, regardless of their actual access to mass transit alternatives, in order to discourage them from driving. Other arguments put forth by the Mayor include reducing vehicular emissions and decreasing congestion that results in general business revenue losses.
• 100% of the revenue generated would be funneled into a Sustainable Mobility and Regional Transportation (SMART) Financing Authority, which has a MTA-like governance structure of City and State appointees. Of the capital projects anticipated to be funded by congestion pricing proceeds through the SMART Financing Authority, most help to alleviate congestion for commuters from Manhattan, New Jersey and Long Island. None of the projects make significant mass transit improvements within the 5 Boroughs that are likely to significantly decrease commutes by car and make public transportation the more efficient mode of transportation, either by travel time or cost.
• The Mayor intended for congestion pricing to be experimented with for a three-year trial period, with a brief review and decisions about whether to keep the tax or abandon it.

The Urban Partnership Agreement “Incentive”

Separately from his plan, the Mayor announced that the City of New York had applied for an Urban Partnership Agreement Grant from the United States Department of Transportation. As part of the requirement to obtain what the City then expected to be about $500 million in grants for various mass transit improvements, such as expanded ferry and bus service, the City would have to implement a congestion pricing program. Meaning, then, that the Federal government was providing state and city governments cash incentives to tax their own constituents more.

The Mayor insisted that the State of New York would be denied the funding if it did not implement congestion pricing by July 17th. On July 16th, legislators in Albany almost got away with betraying the principle of “no taxation without representation” when they nearly ramrodded this tax through State Government. Thankfully, their attempts failed.

The Congestion Tax Commission

On Thursday, July 19th, however, legislators agreed to pass a compromise bill that formed a New York City Traffic Congestion Mitigation Commission to finalize the plans for a Congestion Tax in New York City. 17 appointees from City and State government would serve, with about 12 of the 17 handpicked by those who already supported a Congestion Tax. On July 26th, the State Legislature passed the bill and the Governor signed it into law.

By August 14th, the U.S. DOT announced that it would make an Urban Partnership Agreement with New York City with grants totaling $354 million. Only $10.5 of which would actually help to fund a congestion tax system; the rest, which is for various mass transit improvements, would be held hostage until a Congestion Tax is adopted. The ultimate terms for the grant money to be awarded, which totals less than 1% of the City’s $60 billion annual budget, are as follows:

• The Commission must recommend a plan to the City and State by January 31, 2008
• The City Council must approve the plan, and forward it on to the State Legislature
• The State Government must adopted the plan by March 31, 2008
• The City must ultimately implement the congestion tax by March 31, 2009
• Whatever tax plan was adopted must reduce traffic in the form of vehicle-miles traveled by 6.3%

The Commission held public hearings in the fall, with only a few days notice, to receive public comment about whether or not New Yorkers should be taxed yet even more in their daily lives. As expected for poor notification, there was poor turn out, and those who did testify agreed at least that the Mayor’s specific plan was not right for New York City.

In November and December, the Commission began analyzing alternatives and other impacts from such a tax, and in January 2008, it released a report of five plans to be considered by the Commission for its final recommendation.

• The first was the Mayor’s original plan.
• The second reduced the boundary (for now) to 60th Street, and exempted all drivers who stay within the Tax Zone from having to pay. This means the wealthiest New Yorkers who reside in Manhattan and still choose to drive within the borough that has the best mass transit service will pay no taxes, while the outer borough commuter will pay an extra $2,000 a year. Also, driving on the FDR Drive or the West Side Highway would now become taxable actions.
• The third was to place tolls on the East River and Harlem River bridges.
• The forth was license plate rationing, which would ban vehicles whose license plates end in a certain number from driving into Manhattan that day
• The fifth plan involved exponentially increasing the cost of taxis, parking, on-street parking meters, and other aspects of vehicular transportation.

Strangely, the third plan involving tolls were publicly declared unacceptable by supporters of a Congestion Tax, so that clearly would not have been an option. The fourth and fifth plans did not meet the requirements of the Federal grant, and so they were not viable options. That meant that the only two plans under plausible consideration were #1 and #2, both of which were a Congestion Tax in its purest form.

The Final Recommendation from the Commission

On Thursday, January 31, 2008, the deadline for the Commission to recommend a plan, it adopted Plan #2, the Alternative Congestion Pricing Plan for the State and City to consider.

This plan features an even broader yet imbalanced congestion tax scheme for the present:

• $8 a day tax Monday-Friday, 6 AM to 6 PM, for passenger vehicles
• $21 a day tax Monday-Friday, 6 AM to 6 PM, for trucks
• Affects only inbound traffic; no charge for traffic that stays within the Tax Zone
• ALL vehicular traffic driving into Manhattan south of 60th Street will be taxed, including those traveling only on the FDR Drive or the West Side Highway. This is a significant departure from the Mayor’s original plan.
• Other tolls paid through EZ Pass will be discounted from the $8 tax
• For those without EZ Pass, the City will assess a $1 License Plate Recognition Fee per day
• Increased metered parking rates
• $1 taxi/private car service surcharge during charge hours for trips starting/ending in Tax Zone
• No resident parking tax exemption in Tax Zone
• Residential parking permits will be issued to neighborhoods adjacent to Tax Zone
• “A small proportion of New Yorkers of limited income—those who drive to jobs in the CBD—would be disproportionately impacted by the plan.”

The Commission recommends all the proceeds from the Congestion Tax be given to the MTA’s Capital Plan, to be allocated by the MTA’s Capital Program Review Board, and the increased metered parking fees and increased taxes from the removal of the resident parking tax exemption be given to the NYC Department of Transportation. (The MTA’s Capital Plan is responsible for mass transit improvements throughout New York metropolitan region, not just New York City.)

This plan is expected to have an initial capital investment of $73 million (only 1/7 is covered by the Federal grant), and would cost an annual $62 million to operate. Expected net revenue would be approximately $490 million. All figures are based on early 2007 figures; the report issues the caveat that costs and revenues may change.

What’s Next

In order for congestion pricing to be implemented, the New York City Council must review the plan, adopt it, and it must be approved by the Mayor before going to Albany. Once the State Senate and State Assembly vote on the plan, the Governor must approve it by March 31, 2008. By March 31, 2009, congestion pricing must be implemented. It’s still very possible to stop it in its tracks, so keep writing your elected officials and spread the word!