Congestion Pricing Tax Subtleties

Subtleties abound in Mayor Bloomberg's efforts to institute a congestion pricing tax on commuters in and around New York City. The New York Times reports that the congestion pricing tax would hit those residents living in the affected area in Manhattan just as hard as those commuting into the area below 86th Street.

If you live in Manhattan below 86th Street and do not drive out of the zone, you would pay $4 a day. However, if you go north of 86th Street, or drive into Brooklyn, Queens or New Jersey, you'd get hit with the $8 tax. It would hit you only once per day - so if you made multiple trips, you'd get hit only once.

So, why was this aspect of the plan slow to come to light? Because it might affect the chances that the tax plan would get enacted.

The plan, which requires approval from the Legislature, would use mounted cameras and an E-ZPass system to record cars as they travel in, out, and within the congestion zone. The fees would be in effect weekdays from 6 a.m. to 6 p.m. The fee would be only levied once a day per vehicle; in other words, a motorist who drives into Manhattan and back on the same day would only be charged once. Drivers whose trips start in the zone and do not leave it would pay only a $4 fee, as in the case of a person who lives on the Upper East Side and drives to a job on Wall Street, or a TriBeCa resident who drives to an Upper West Side doctor’s appointment.

But under the plan, if those same people drive north of 86th Street, or to New Jersey or Queens or Brooklyn, the $4 fee rises to $8. Drivers with E-Z Pass would get credit for any bridge or tunnel tolls.

Trucks would also be charged $21 to enter or leave the zone, or $5.50 to travel within it. In seeking public support for the plan, city officials have not been emphasizing the fee that will be imposed on those driving out of the congestion pricing zone, perhaps, in part, it appears, because that would be levied on far fewer drivers than drive in everyday.

But city officials also appear aware of the potential political sensitivity of the plan, and are counting on support from people residing inside the zone, who could be expected to benefit from the reduction in traffic. Most opposition to the plan so far has come from the other boroughs, and the suburbs, where some residents see it as a financial burden and an elitist initiative that favors Manhattan.

If this plan gets opposition from those living in Manhattan, it would almost certainly turn the tide completely against the plan.

Let me be blunt. Bloomberg's congestion pricing plan is nothing but a regressive tax on commuters, many of whom have no choice but to drive in to Manhattan because mass transit options are limited. The MTA and NJ Transit admit that they cannot handle additional commuters because they are already stretched to the limit, though MTA flacks had to back off that assessment - only by putting out numbers that strain credulity.

While the idea of raising money to cover mass transit improvements is a worthy and necessary one, this kind of regressive tax will affect those who can afford it the least.