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3/10/2008
UK: Voters May Scale Back London Congestion Tax
Electoral difficulties for London, UK mayor could mean a scaling back of the congestion tax.

Hugo Chavez with Ken Livinstone
London's controversial mayor may find himself out of a job in May. According to the latest polls, Conservative Member of Parliament Boris Johnson is ahead in the race to unseat Ken Livingstone for the job of running England's capital city. Among other proposals, Johnson is calling for a complete overhaul of motoring policy in the city -- including a scaling back of the congestion tax.

"After eight years of a Labour Mayor, we too often spend our mornings and evenings in cramped, overcrowded carriages or sitting for hours in traffic, and we pay the highest fares in Europe," Johnson wrote in his forty-page transportation proposal. "In response to this challenge, we hear nothing but the same old out-of-date solutions from a Labour Mayor who has run out of ideas."

Johnson's plan would eliminate the new £25 (US $50) charge imposed on family vehicles and sports cars entering the downtown area during peak hours. It would also redraw the boundaries so that fewer motorists would be included in the charging zone, with the fate of the western extension determined by referendum. Johnson's plan would also move to a charging system based on accounts that would eliminate most of the £90 million (US $180 million) in revenue collected from people who forget to pay the charge.

Johnson's changes are modest by design. Livingstone had set up a contract with IBM, the vendor that will take over charging operation in 2009, in such a way that no political challenger could run on a platform that called for its full elimination. In a written response to a London Assembly member last year, the mayor admitted that any successor attempting to eliminate the tax would have to pay up to £50 million (US $100 million) in penalties.

"In these circumstances, IBM is entitled to compensation in a number of defined categories, the value of which will vary depending on the phase of the contract," Livingstone wrote. "If the termination takes place after IBM has assumed control of the operations, a component of lost profit no greater than an amount equal to twelve months worth of IBM profit on this contract as recorded in the contractual financial model."

London's congestion charge has spawned an international conflict as several embassies located in the charging zone, including those of the US, Japan, Germany and France, have refused to pay, citing international agreements exempting diplomats from taxation by foreign governments. As of last week, Transport for London claimed diplomats owed £10 million (US $20 million) in unpaid fees.

Apart from the congestion tax reform, Johnson also promised to re-phase traffic signals to promote smooth the flow of traffic. Signals are currently timed in such a way as to introduce congestion as a "traffic calming" measure.



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