Car travel costs more than the price of gas and tolls. Those costs include the hours spent in traffic, noise and environmental pollution, wear and tear on roads and highways, and vehicle crashes and road deaths. Policymakers can use congestion pricing to try to recoup some of these costs as the policy makes driving, especially during peak times, more expensive.  

Federal and state tax dollars help pay for roads and highways. In 2021, state motor fuel taxes generated about $50 billion in revenue, with nearly 90 percent of that amount going towards transportation purposes (13 percent to mass transit and 76 percent to roads, streets and highways). The federal government pitched in a similar amount. 

State and local highway tolls also play a significant role. In 2021, tolls and other street construction and repair fees contributed about $20 billion to funds for highway and roads.  

But state and local general revenues, like income and sales taxes, cover the majority of funding for transportation expenditures. In other words, taxpayers, regardless of driving status, share the burden of paying for road and highway spending. 

Recently, leaders from many US cities have explored congestion pricing – charging drivers extra for using their cars during specific times of day in specific places. The goal is twofold: to raise revenue and to reduce traffic during peak periods.  

Congestion pricing exists around the world. Here are some examples: 

• Gothenburg, Sweden: Introduced on January 1, 2013. The tax is levied on most vehicles entering and exiting central Gothenburg and some main roads passing by the city. The tax amount varies depending on time and day of the week. Maximum charge is 60 SEK ($5.52) per day. 
• London, UK: Introduced on February 17, 2003. The tax is levied on most vehicles driven within the Congestion Charge Zone in Central London. The standard daily charge is £15 ($18.67).  
• Milan, Italy: Introduced in 2012. The congestion charge, “Area C”, is active in the city center of Milan and restricts vehicles’ entrance. In addition, only the less polluting vehicles may enter. The maximum charge is €22.50 ($23.31).  
• Valletta, Malta: Introduced on May 1, 2007. Vehicles entering the city pay an hourly charge or a maximum daily charge of €6.52 ($6.75).  
• Rome, Italy: Introduced in 2001. Vehicles entering the “ZTL" (Zona Traffico Limitato) must have a permit to access the ZTL. Only local drivers can purchase the permits. The price of a permit varies by zone. 
• Singapore: Introduced in 1975. The tax is levied every time a driver enters the central district. The rate varies for drivers to use the road based on location, time of day, vehicle type, and real-time speeds. The maximum charge is 6.08 SGD ($4.49). 
• Stockholm, Sweden: Introduced permanently on August 1, 2007. The tax is levied on most vehicles entering and exiting Stockholm. Maximum charge is 130 SEK ($11.96) per day. 

(USD conversions were done on February 11, 2025).  

After decades of debate, New York City and State introduced a congestion pricing program for vehicles entering Manhattan’s Central Business District. In effect since Jan. 5, 2025, the program aims to reduce traffic, pollution, and other negative impacts of car use, while raising revenue for the Metropolitan Transportation Authority, the city’s primary transit provider. New York City is the first American city to implement such a charge for entering a congestion zone.  

To learn more about congestion pricing, read our blog “If Not Congestion Pricing In New York City, Then What?”