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4/6/2006
Report Shows Congestion Tax Would Hurt New York Business
Queens Chamber of Commerce report shows a congestion tax would cost the New York City, New York economy $1.9 billion a year.

New York trafficThe Queens Chamber of Commerce issued a report in February arguing that New York City's economy would be hurt if a London-style congestion tax were imposed, as New York transportation officials have urged with the support of the Federal Highway Administration. The report assumes that the charge to drive into the city during peak hours would ultimately be $14 -- equal to London's current price, although the price was lower when the tax was first imposed. The study argues that this would reduce the number of vehicles entering the city by 28 percent -- also equal to London's experience.

"Our preliminary analysis -- based both on London's experience and on data about travel into the Manhattan CBD -- suggest that the cost of London-style congestion pricing in terms of lost business activity and jobs would greatly outweigh any benefits it might deliver in terms of reduced congestion," the report stated.

In New York, that would mean nearly 200,000 fewer cars and 286,000 fewer people entering by those cars. Among these, most would switch to public transportation or find other alternatives, but about 1 in 7, or 40,000, would simply not enter the city at all. Those avoiding the city would take their spending elsewhere and cost the city $1.89 billion a year. The report concludes that this reduced spending would lead to $2.7 billion less in economic output overall and cost 23,100 jobs. Those who do enter would pay the city $1.78 billion annually for the privilege. The cost of goods in the city would increase as business would pass along half-a-billion in new transportation costs on to consumers.

"The loses from reduced spending cited above do not include any losses that might result from relocation of businesses outside of New York City -- or decisions not to invest here," the report stated. "Of the boroughs outside Manhattan, Queens would most likely bear the heaviest cost.... We can expect that some of the reduction in traffic congestion in Midtown and Lower Manhattan would be offset by increased congestion in Queens and other boroughs."

The city's most crowded subway lines would become even more crowded as 164,500 additional passengers attempt to enter the city by mass transit. During rush hour, the most popular trains -- the 4 and 5 -- are already 20 percent over capacity.

Even the money generated by the tax is not significant when the costs of overhead are considered. In London, the camera monitoring system takes 50-55 percent of revenue in operational expenses. A system in Manhattan would be even more complex and need to process 500,000 transactions per day -- four times that of London.

Source: A Cure Worse than the Disease? (Queens Chamber of Commerce, 2/28/2006)

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