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7/5/2005
London Congestion Charge Hike Hits Local Business
London, UK's congestion charge turns into revenue raising device, despite government promises. Business to suffer from increased charge.

Mayor Ken Livingstone
London's tax on motorists who enter the city increased to £8 (US $14) yesterday, despite election year promises from London Mayor Ken Livingstone that the congestion charge would never be used to raise revenue. Business leaders condemned the increase, saying it would devastate business.

"The issue of the congestion charge is not about raising money," Livingstone said in November 2003. Transport for London estimates the £3 charge increase will only reduce road traffic by 2 percent, but will add £45 million (US $79 million) to the city's budget for buses and other public transportation. In April 2005 Livingstone admitted of the increase, "It all helps. Of course it's useful to have that income."

Currently, more money is made from camera tickets sent to those who mistakenly forget to pay the tax (£660,000 daily) than the charge itself (£540,000). Livingstone has refused all attempts to extend the payment deadline to reduce the number of people who forget to pay the charge.

Since the charge went into effect, Transport for London claims average travel speeds increased from 8.9 MPH to 10.3 MPH. But FootFall Ltd. estimates that pedestrian shopping plunged 11 percent last year, and a London Chamber of Commerce survey of 2,159 retailers showed that 84 percent of retailers saw sales plummet. One-third are considering either moving or closing up shop entirely. On April 21, Imperial College released a study showing the tax had a "severe" impact on shops in the Oxford Street area.

Nonetheless, Livingstone plans to extend the congestion tax zone beyond the current eight square mile area. The Center for Economics and Business Research reported yesterday that lost revenue to local business from this change would exceed £236 million (US $415 million) and result in the loss of 6,000 jobs.

Article Excerpt:
There is enormous anxiety that this hike is so steep that it will decimate trade and leave the area within the zone a ghost town,'' said Nick Goulding, chief executive of the Forum of Private Business, in a statement June 29. Retailers are already suffering as interest rates at a 3 1/2- year high and a weakening job market keep consumers at home. Retail sales fell the most in almost a quarter of a century in June, the Confederation of British Industry said June 29.
Source: London Mayor Increases Traffic Toll, Angers Retailers (Bloomberg, 7/4/2005)

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