Tender for Tel Aviv congestion charge operator on horizon

Traffic on Ayalon Highway  credit: Eyal Izhar
Traffic on Ayalon Highway credit: Eyal Izhar

Objections by Minister of Transport Miri Regev have delayed it for a year, but the Ministry of Finance is determined that we will pay to drive into the Tel Aviv area.

The Congestion Charge Law was passed as part of the reform-laden Economic Arrangements Law accompanying the budget in 2021, and it is due to come into force in 2025, although the Minister of Transport and the Minister of Finance have the power to postpone that until 2026. "Globes" has now learned that the Ministry of Finance and the Israel Tax Authority are preparing to publish a tender for operating the congestion charge by the end of this year.

The Congestion Charge Law passed under the previous government, and in exchange for consent to the legislation of the minister of transport at the time, Merav Michaeli, huge budgets were promised for public transport, including additional bus services costing billions of shekels and a five-year plan for public transport infrastructure costing billions more, proposals that now seem like ancient history. It was also determined that the revenue from the congestion charge would be channeled to financing the construction of the Metro in Gush Dan - three underground railway lines traversing 24 local authorities in the Greater Tel Aviv area.

On taking up her post in March last year, the current minister of transport, Miri Regev, expressed fierce opposition to the law, and a tender by state-owned Ayalon Highways for installing toll gates at the entrances to the metropolis and operating collection of the charge was frozen. In August last year, the Israel Tax Authority published a tender to find employees for a new unit to be in charge of outlining policy on transport taxation, including travel taxes for electric vehicles and the congestion charge.

The implication of a year’s delay in publishing the tender is presumably also a postponement of the advent of the charge, which under the law is due to come into force by 2026, even if gradually. The Ministry of Finance is also depending on the charge materializing, as reflected in the three-year budget plan for 2025-2027. The congestion charge is expected to rake in some NIS 1.3 billion for the public purse in 2027.

The tender, worth hundreds of millions of shekels, is for planning, procurement, construction, installation, operation, and maintenance of everything required to collect the charge, and is open to both Israeli and international companies. The original tender included operation of the system for twelve years.

Delaying the Metro

At the "Globes" Infrastructures Conference held in March, Oshrat David Dakar, deputy accountant general at the Ministry of Finance, said, "If the Ministry of Transport doesn’t carry out the project, the Ministry of Finance will. We’re a year behind because of the delay to the congestion charge. There’s no other source of finance." She was referring to the fact that some of the finance for constructing the Metro will come from levies and charges. "The project is built on the assumption that there will be congestion charges," she said. "This has to be understood, there’s a law that is not being observed. The Ministry of Finance will be obliged to finance the largest project in the State of Israel."

Sapir Ifergan, head of the transport and aviation team in the Ministry of Finance Budgets Division, said last December at a conference of the Transport Today and Tomorrow organization: "Until 2030, there will be no relief for the traffic jams in Gush Dan, and so the immediate solution is to impose a congestion charge and to raise prices at public parking lots. The rate of growth of the population and in the number of vehicles per person make reality-changing solutions necessary."

Trucks will pay double

Under the law, there will be three rings in Gush Dan: an inner, middle, and outer ring. The congestion charge will apply to vehicles crossing between these rings from 6:30 am to 10:00 am. For vehicles heading towards the center, the charge will be NIS 10 each in the middle and inner rings, and NIS 5 in the outer ring. Between 3 pm and 7 pm, the charge will be NIS 5 in both directions in the inner and middle rings, and NIS 2.5 in the outer ring.

In the future, the Ministry of Finance will revise the tariffs in the light of examination of travel speeds, according to a formula, with the Central Bureau of Statistic being responsible for determining speed measurements. The use of the speed criterion is intended to test the effectiveness of the congestion charge in reducing traffic loads.

In the discussions on the bill in the Knesset Finance Committee, it was decided to exempt motorcycles from the congestion charge, and also emergency and rescue vehicles. After long arguments about taxis, it was decided that they would pay 50% of the charge, while truck drivers will pay double.

Hesitations in New York too

Israel is not the only country to keep changing its policy on congestion charges. Governor of New York State Kathy Hochul recently announced that a congestion charge in Manhattan that was due to be between $15 and $24 daily would be shelved.

There too, cancellation of the reform has hit budgeting for public transport, as the charge was meant to raise billions of dollars for improving the Subway, the underground railway system in New York City. Hochul had expressed enthusiastic support for the plan, and US media attribute her change of mind to political motives.

According to "The Wall Street Journal", congestion pricing in New York would have raised some $15 billion for the Metropolitan Transportation Authority to improve the public transport system. Hundreds of millions of dollars had been invested in the project that was suddenly cancelled at the last minute.

Congestion charges apply in London and in Stockholm, and are intended to make drivers aware of the negative consequences of using private vehicles: air pollution, loss of time and damage to productivity, road accidents, and so forth. Alongside financing improvement in the supply of public transport solutions, the charge serves to reduce demand for journeys in private vehicles.

Published by Globes, Israel business news - en.globes.co.il - on July 3, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Traffic on Ayalon Highway  credit: Eyal Izhar
Traffic on Ayalon Highway credit: Eyal Izhar
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