Friday, 1 October 2021

Tel Aviv to introduce congestion charging

After New York (crossing fingers), Tel Aviv looks like being the next city to introduce congestion pricing after the Israeli Government seems to have agreed, notwithstanding opposition from the Transport Minister and tepid support from the Finance Minister, to a plan for a triple cordon around the city. 


To raise money AND reduce congestion. The scheme is motivated by the usual combination of a desire to significantly reduce traffic, but also raise a lot of money. It seems the latter is very important, although the indicative concept is definitely intended (due to the geography and the time of operation) to make a sizeable dent on congestion (although no data on what impact it will have has been released). 

What sort of scheme? 

A triple cordon. I haven’t been able to source maps of where the zones MIGHT be (yet), but basically it is described as an inner city ring, a second ring 3-7km from the inner ring and a third ring 7-12 km from the inner ring, all bounded by a series of major roads. Ben Gurion Airport will be within the outer ring.  I've never had the good fortune to visit Tel Aviv so my geographical knowledge is very limited.

These ring locations are yet to be finalised, but have been described as follows:

The inner ring will include central and south Tel Aviv. The middle ring will include Ramat Gan, Givatayim, Bnei Brak, Holon and Bat Yam and Azur. The outer ring will include Herzliya, Petah Tikva, Kiryat Ono, Givat Shmuel, Ganei Tikva, Yehud Monoson, Or Yehuda, Rishon Lezion and Beit Dagan. 

This appears to be quite a large scheme in terms of physical scale, covering vast areas of Tel Aviv, so it will have quite a significant impact.

When will it operate and what types of vehicles will it apply to?

It is intended to operate weekday peak times from 0630-1000 and 1500-1900 and will apply to cars, trucks and motorcycles. Buses, taxis, emergency vehicles and cars with disabled parking badges will be exempt. Trucks will be charged twice the fee of cars. No discount or exemption for residents living within any of the cordons has been announced.

This is largely sensible from a policy point of view, although exempting taxis may be more to avoid protests from that sector than any economic rationale. Taxis are, after all, cars that carry people for hire. Double the fee for trucks makes sense from a road space occupancy perspective, and having minimal exemptions is a good idea to minimise costs.

How much will the fees be?

Various reports have indicated that the fee schedule will see a maximum charge of NIS 37.50 per day (US$11.62), with the standard fees ranging from NIS 2.5 (US$0.77) for the outer ring, NIS 5 (US$1.55) for the middle ring and NIS 10 for the inner ring (US$3.10). These will be applied separately for inbound and outbound travel. 

What technology?

The primary technology to be used will be Automatic Number Plate Recognition, although one report indicated that drivers with accounts (and implicitly a toll tag) would be charged less (NIS 2, 3.5 and 7 respectively). 

How much revenue will it raise?

The proposal is expected to raise NIS 1.3 billion (US$400 million) after costs. Which is reasonable, although another report indicated it would raise NIS 2.7 billion (US$840 million), which surely can't mean it will cost NIS 1.4 billion to run (but may reflect a change of forecasts).

What will it be used for?

The net revenues are to be used to help fund the Tel Aviv metro project, which has a construction cost of NIS 150 billion (US$46.5 billion). However, the metro construction isn’t expected to start until 2025 and be completed in 2032, so it is will be interesting to see the public reaction to motorists paying for a project many wont be able to use for some time. 

What will be done in advance?

 This isn’t the only public transport project though, as by the time the congestion charge is live, significant improvements to bus services and at least one of three light rail lines will be open (two more are under construction) to help support modal shift. 

When will it be in operation?


Who will be responsible?

The Israel Tax Authority will be legally responsible for collecting the charge, but the actual management, operations and collection will lie with Netivei Ayalon, a company that operates under the auspices of the Transportation Ministry and which I believe is already responsible for managing highways around Tel Aviv include toll lanes. The role of the new company will be to plan, build, operate and maintain the necessary funds to charge the congestion charge.

What do the politics look like?

The charge will be introduced despite the opposition of Minister of Transport Meirav Michaeli, who sees it as a regressive tax, which will hurt the less well off. In the end, senior Ministry of Finance budget division officials prevailed in their determination to include the congestion charge in the Economic Arrangements Bill. The officials prevailed even though Minister of Finance Avigdor Liberman himself said he was not prepared to fight for the charge.

It will take at least 30 months before the infrastructure will be in place to implement the charge. The Tel Aviv congestion charge will have to survive a Knesset vote and the long time until it comes into effect.

Two days later, the Jerusalem Post has reported that the Minister of Transport has "now embraced it as a quick short-term solution to Tel Aviv’s traffic problems, and as a source of funding for other transportation projects".

It looks almost like officials have said "you need to do this, you have no choice (fiscally)".  However, it makes perfect sense that this has been announced just after the new rotation government was formed on 13 June 2021, because the sooner this can be placed into law the better, given how fragile Israeli politics is.


Good luck to Israel and Tel Aviv, it seems like a very bold proposal, but congestion in Tel Aviv is reportedly endemic and as we all know, simply building more transport supply is NEVER enough, whether roads or public transport. The world needs more good examples of congestion pricing.  Regardless of whatever happens around the details, I hope something happens. I fear three cordons may be going too far, but at least two are likely to be needed to have a meaningful impact, and half of that impact (given the experiences of Stockholm and Singapore) will be time of day shift not modal shift. There is a lot of work to do, but beyond congestion, it seems hard to see how fiscally the Tel Aviv metro can be afforded (or even attract enough patronage) without such a measure.

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