Car Tax Dead but Congestion Charge Gets a Lift

A proposal to levy a flat monthly tax on Budapest car owners looked dead on arrival today. Budapest City Hall, grasping for a life line to pull BKV out of its financial quagmire, was considering a monthly tax of almost HUF 10,000 a month on car owners, which would raise an estimated HUF 32 billion per year. But the idea lasted about half a news cycle. Mayor Istvan Tarlos and just about everyone else denied having anything to do with introducing the proposal, and by Wednesday afternoon, the mayor was saying it was stillborn.

The encouraging news is that the idea of a congestion charge is still alive. Antal Rogan, mayor of District V and leader of the Fidesz faction in the City Assembly, pronouced that this would be would be a "more rational and reasonable solution."

I am in complete agreement. The reason a congestion charge would be better is because it would be levied only on drivers entering downtown. Car owners who don't come downtown or who come by another mode (public transport, foot, boat or bike) don't have to pay.

With congestion charges, the intent is to put a price on road use and thereby pressure some car owners to not drive downtown. The avoided traffic leads to reduced congestion, while the remaining traffic yields revenue that can be used to improve non-car mobility options (public transport, bike lanes and foot paths), which will lead to further reduction in car use. A virtuous cycle.

Congestion charges are very controversial because you're asking people to pay something that they currently get for free. However, the free-of-charge status quo does come with a price: travelers' time. It is partly because road use is free that they're so crowded. Putting a price on them will mean that those who don't really need to drive downtown will avoid the trip while those who do need to will be able to make the journey on less congested streets. This perspective prompted a New Zealand blogger to say that congestion charging should really be sold as a "congestion avoidance" scheme.

Some conservative bloggers have argued -- a bit disingenuously -- that such charges are unfair because they tax the poor so the rich can drive fast. But roadways are a valuable, limited resource and there's no reason why they should be free of charge to everyone at all times. And, in any case, a congestion charge can be implemented to include consideration for social fairness, including income-based discounts.

I imagine the flat, monthly tax seemed an attractive option to decision makers because it would be relatively simple and inexpensive to implement. A congestion charging scheme, by contrast, will involve a cordon of ANPR cameras that monitor every entry point into downtown along with enabling legislation at the national level and more. However, there's no sense in taxing every car owner regardless of their travel habits. I hope the city leadership can use the opportunity of the current crisis to push forward a sensible idea.