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BITRE | Working paper 74

Perception of the charge as a tax

The community attitudes to congestion charging also depend on whether the charge

is perceived as a tax. The labels assigned to the charge may influence community

perceptions. Hence, use of the terms

The focus on scheme losers reflects a

tendency for people to view the charge

as a compulsory tax.

such as ‘community charge’ for Britain’s

council poll tax and the proposed Dutch

fee as an ‘Acceleration Price’ (since the

revenue generated would allow projects

to be accelerated).

Box 4.1

Diplomatic dispute over the London congestion charge

Since 1 July 2005, the US embassy in London has refused to pay the London

Congestion Charge, amassing a bill of £926 650 to end-September 2006 (Mayor

for London 2006). The embassy argues that it is exempt from the charge that it

regards as a municipal tax; under the 1961 Vienna Convention, embassies are

exempt from such taxes.

The argument therefore pivots on whether the £8 fee is a tax or a charge.

London’s mayor, Ken Livingstone, and the body responsible for implementing

the charge, Transport for London, argue that since it is optional, it is a charge.

They point out that the US Embassies in Singapore and Norway pay the tolls in

those countries.

The embassy counters that the tolls in Singapore and Norway are used for

maintenance of the road system and hence are a charge for the use of the

road. In contrast, the revenue raised by the London charge is earmarked for

London’s public transport system.

The increase in the charge from £5 to £8 per day has been seen as further

evidence that the fee is a tax. Tony Travers, transport specialist at the London

School of Economics, claimed the 60 per cent increase in the charge in July

2005 indicates that it is a tax rather than a congestion charge (Tumposky 2005).

Transport for London argues that because there is no compulsion in the

payment (road users choose to drive into the charging zone) then the charge

is not a tax.

The perception of congestion charging as a tax is reinforced by instances, such as has

occurred in London, where the level and imposition of the charges is applied in what

could be regarded as an opportunistic manner. When the £5 congestion charge was

introduced in 2003, the Mayor committed to a fixed charge for 10 years. In June 2005,

the charge was increased to £8. For some high CO 2

emitting vehicles, the charge was

due to be increased again in 2008. 61

61. Since February 2008, London’s congestion charges have been modulated (varied) to reflect average CO 2

emission

levels of different vehicle categories. This charge should not be confused with the low-emission zone (LEZ) charge

introduced in February 2008 but aimed at improving improve local air quality in Greater London—a considerably

larger area than the congestion charge applies to. The LEZ charge applies to heavy vehicles at all hours.

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