Economics Assignment: Evaluating London Congestion Charge Objections

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This economics assignment analyzes the London Congestion Charge implemented in 2003 to manage vehicles and reduce pollution. The assignment focuses on an objection regarding the flat congestion charge irrespective of income levels. It argues that the charge disproportionately affects lower-income groups compared to higher-income earners. The paper suggests that a progressive tax structure, where charges are based on income percentage, would promote greater welfare and equality. The assignment supports this objection, asserting that policies addressing income-based concerns could improve the charging system's implementation and acceptance. The analysis includes references to relevant research papers and economic principles, providing a comprehensive evaluation of the London Congestion Charge's impact and potential improvements.
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Running head: ECONOMICS ASSIGNMENT
Economics Assignment
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Table of Contents
Introduction......................................................................................................................................2
Objection 9:.....................................................................................................................................2
Conclusion.......................................................................................................................................3
References........................................................................................................................................4
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2ECONOMICS ASSIGNMENT
Introduction
The London Congestion Charge was implemented in 2003, by the then Mayor of London,
Ken Livingstone, with the objective of better operation and efficient management of the vehicles
and reduction of pollution in the Congestion Charge Zones (Ellison, Greaves & Hensher, 2013).
The policy, before its implementation, faced several objectives from different perspectives.
Keeping this into consideration, the following section tries to evaluate two of such objections
and their credibility, with the help of logical reasoning and scenarios existing in the real world.
Objection 9:
"The congestion charge should be set as a percentage of income."
The congestion charge, which was first implemented in 2003, currently amounts to 11.50
pounds each day for the usual cars, in the Congestion Charge Zones of London, exempting the
electric cars and those cars which contribute significantly less to the air pollution in the country.
However, for the older cars and those with higher carbon emitting technologies, the charge is
another extra ten pounds daily in these congestion charge zones. According to the scheme,
defaulting can lead to a penalty ranging from 65 pounds to 195 pounds (Kaparias & Bell, 2012,
September).
This daily charge has been imposed on the residents of the country, irrespective of their
income levels, thereby compelling both the rich as well as the poor residents to pay same level of
taxes, irrespective of their economic conditions. While the daily charge of 11.50 pounds a day,
may not been hurting the richer section of the society as the higher income percentile of the
country (upper ten percent considered), enjoys an average income of nearly 108,000 pounds, the
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3ECONOMICS ASSIGNMENT
same can be extremely hurting for the middle class and the poorer section of the society (Zhen et
al., 2014). This is because the lowest income class (lower ten percent of the population
considered), only enjoy an average income of 4,500 pounds.
Keeping this into consideration the taxing structure should have been in the form of
progressive tax collection. That is, the congestion charge should have been implemented as a
percentage of the income of the individual residents instead of being charged equally from all the
income levels (Fan, 2015). The implementation of the process of charging more from the higher
income class and less from the lower would have contributed in greater welfare and equality
among the different socio-economic strata of the society.
Conclusion
From the above discussion, it can asserted that the objection put forward regarding the
implementations of the congestion charge in London were considerably credible and policies to
address the issues could help in solving the problems highlighted by the objection, thereby
making implementation of the charging system comparatively easy.
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References
Ellison, R. B., Greaves, S. P., & Hensher, D. A. (2013). Five years of London’s low emission
zone: Effects on vehicle fleet composition and air quality. Transportation Research Part
D: Transport and Environment, 23, 25-33.
Fan, W. (2015). Optimal congestion pricing toll design for revenue maximization:
comprehensive numerical results and implications. Canadian Journal of Civil
Engineering, 42(8), 544-551.
Kaparias, I., & Bell, M. G. (2012, September). London congestion charging: successes, gaps and
future opportunities offered by cooperative ITS. In Intelligent Transportation Systems
(ITSC), 2012 15th International IEEE Conference on(pp. 134-139). IEEE.
Zheng, Z., Liu, Z., Liu, C., & Shiwakoti, N. (2014). Understanding public response to a
congestion charge: A random-effects ordered logit approach. Transportation Research
Part A: Policy and Practice, 70, 117-134.
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