How does Congestion Tax Work?

A congestion tax is a price/tax levied on the private vehicles that enter specific areas usually within a city during peak traffic hours. It is part of a strategy to relieve traffic congestion in a particular area.

Aspirants would find this topic helpful for the IAS Exam.

What is the benefit of Congestion Tax?

It serves 2 main purposes

  1. Restricting the movement of private vehicles in the busy streets, thereby increasing ridership public transport which results in lesser congestion, faster movement of vehicles, saving more time, and better health due to lesser pollution and increase productivity.
  2. It will provide much-needed capital to revitalise public transit infrastructure.

Which are the major examples of implementation of a congestion tax in cities?

The major successful examples are given below

  1. Singapore
  2. London
  3. New York
  4. Many cities in the European Union.

Which are the types of Congestion Tax implemented in cities across the globe?

There are 4 major types of systems implemented.

  1. Cordon area around the city centre.
  2. Charges for passing cordon line.
  3. Area-wide congestion pricing
  4. Charges for being inside an area.


The above details would help candidates preparing for UPSC 2021.

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