A city that suffers frequent traffic jams around its central business districts or most heavily used streets can set up a congestion zone to discourage drivers from using those areas during peak travel times. Cities like London already use congestion zones -- one-quarter of all jobs in London reside in the congestion zone. Charging a congestion price reduces congestion and helps pay for the city's road maintenance bills. However, congestion zones have several disadvantages.
Setting up a congestion zone may require shoppers to pay an extra fee if they want to visit a store that lies in that zone during peak times. If nearby cities do not have congestion tolls, then shoppers may decide to visit a store in another city instead. This reduces the amount of sales tax revenue that the city collects and irritates local merchants.
A local business operating within a congestion zone may raise its prices to cover the cost of the congestion toll, increasing the cost of basic necessities such as food for residents who can't easily travel to stores outside the area.
The city may decide to hand out passes that exempt its own residents from paying the toll, and require tourists, business travellers and long-haul truckers to pay the toll. For the toll to effectively reduce traffic, the city may have to charge these drivers a higher toll than it could charge if all residents were subject to the toll, according to the Brookings Institute. If residents of one suburb or district have to pay the toll and residents of a nearby area are exempt, then this may lead to resentment.
Instead of cutting air pollution, a congestion zone can increase air pollution. For example, a driver can travel 20 miles through the congestion zone and pay a congestion charge; however, because it's cheaper, the same driver might use an alternate route that circumvents the congestion zone but requires the driver to drive 40 miles. Thus, the vehicle uses up more gas and creates more pollution.
The city incurs costs to set up the congestion zone. The city has to pay for cameras and other equipment to monitor drivers. The city also has to enforce the congestion zone, setting up toll booths and other revenue collection facilities. If a driver does not pay the congestion toll, then the city may have to pay legal costs if the driver decides to contest a fine for not paying the toll.