Remember the massive traffic jam in Bengaluru last week? Comedian Trevor Noah was apparently 20-minutes late to his stand up show that day. School kids reached home at 9pm. People didn’t get taxis and even walked 12km to get home.

And now, there are renewed calls to fix this traffic mess. But one thing caught our attention. A tax. So in today’s Finshots, we dive into what this is all about.

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The Story

₹20,000 crores.

That’s roughly how much Bengaluru loses each year due to traffic congestion. You’re stuck behind an endless sea of cars and it’s wasted time. So researchers took the time lost by being stuck in traffic and converted this into productive or salary hours to come up with a singular number.

And if that number didn’t blow your mind, here’s something even more damning — in 2005, traffic in Bengaluru moved at the speed of 35 km an hour; in 2014, it had slowed down to 9.2 kmph; by 2016, the speed dropped like a rock to around 4km an hour during peak times in IT zones.

Insane, huh?

Now we could go on and on about how Bengaluru is one of the most congested cities in the world. But we think we’ve made our point and you know the extent of the problem by now. And if you think about it, in a sense it all boils down to one thing — population growth. The unsustainable kind. The number of people living in the city has shot up by 2.5x in the past couple of decades.

Source: Economic Survey

And this burgeoning population comes with higher disposable incomes and aspirations. Car ownership is still very much a status symbol and that has exploded too. Meanwhile, other than simply stretching the borders of the city further, not much has changed. The urban road infrastructure simply hasn’t been able to keep up. Wide roads might seem attractive. Flyovers appear as a credible alternative. But all this offers temporary respite. All it does is attract even more cars onto the roads. And it’s only a matter of time before those get clogged too.

So, what’s the way out? You can’t just put a cap on the number of people who can move to the city every year, right? You can’t impose a ban on vehicles, no? These would be too draconian.

Well, policymakers think that the magic bean is something called a ‘congestion’ tax.

Simply put, it means that if you choose to take your car out during peak times, you shell out an extra fee to the government. It’s a disincentive to stop you from firing up your car on the way to work. It’s a way to get fewer cars on the road, reduce the congestion, and hence the wasted hours.

But how will this even be implemented, you ask?

The legendary FASTag of course. Every car’s windshield already features this pre-loaded digital wallet in the shape of a sticker. So it’s just about extending it to collect a toll at entry points to major roads. Yup, that means you’ll need toll-like checkpoints with roving cameras. So the moment you swerve into a lane which has been flagged for heavy traffic, ping goes the camera and a bit of your money.

Now you can be sure that a lot of people are going to be livid if this plan eventually becomes reality. After all, you’ve already paid all those gazillion taxes — GST, road tax and even tolls when you are travelling. And now you have to pay another tax? It seems like policymakers are shunning their responsibility and simply masking their incompetence with an additional tax.

But let's suppose you are playing the devil's advocate here. How would anyone justify this? Well, one idea is this— if the roads are overrun by vehicles and congested, you have to inevitably pay for it; you pay for it in terms of lost time. So you could simply pay some money and hope that you save time with fewer people on the road. This is a direct payment of course.

And Bengaluru’s not the first city to dream up this stuff. We have some real-world experiments to turn to — notably London and Sweden. And the experiment in London seems to have shown some promise. Between 2002 and 2014, the number of private cars entering these so-called congested zones dropped by 39%. The annual revenues of ~$300 million were directed towards public transport systems. Until ride-hailing apps like Uber popped up and messed it up again. But until then at least the congestion levels dropped.

Even cities like New York are considering it now.

And if you’re worried about whether this will hurt low-income people, it appears that it doesn’t. When London was getting ready to introduce this tax, studies indicated that only 14% who came into central London did so by car. They were folks with a higher income anyway and could afford to part with 5 pounds a day. And New York might just hand out some form of a tax credit to households below a certain income threshold. After all, earlier studies indicated that only 2% of the city’s working poor would be affected by congestion tax. And if you look at a place like India, you might be able to split this argument into a 4-wheeler versus 2-wheeler matter. If you consider that upper-income folks drive cars to work and others commute on two wheels, naturally one set of wheels will get an exemption here.

So yeah, that's the argument for a congestion tax.

But here’s the thing, despite all this, London still continues to top the charts when it comes to traffic congestion. Even with its fairly robust public transport system. And one of the reasons is the limited urban infrastructure. London decided to make the city more walking friendly. And since they couldn’t really expand, they did the next best thing. They shrunk roads and widened footpaths. In the end, the road congestion remained. A trade-off really. And it’s something Bengaluru will have to mull over if they choose to go down this route.

And not to forget the immediate need for public transport. Look at Bogota in Colombia which was also infamous for traffic congestion and introduced a tax. As per a government official Felipe A Ramirez Buitrago at the time:

The most important thing was providing reliable public transport. BRTS [bus rapid transit system] buses run from 4 am to 11 pm. During peak hours, the headway is 1 minute and 50 seconds. If you want a massive system, whether metro or bus, you need good headway. Otherwise, people won’t come. We also provided first- and last-mile connectivity by building better walking and cycling tracks.

And therein lies the rub of the problem. Bengaluru has a massive shortfall of buses. The metro still doesn’t offer adequate last-mile connectivity. And even the priority bus lanes they’d introduced in 2019 have since been scrapped. So unless public transport is adequate, just trying to take the cars off the road with a tax won’t be enough.

It’s a complicated problem to solve.

Until then…

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