London to penalise gas-guzzling cars

Eeyess.

Owners of gas-guzzling cars will have to pay £25 ($49) a day to drive them in central London from October, mayor Ken Livingstone said on Tuesday.

The decision, following a year of consultations, is part of a package that Livingstone is bringing in to cut London’s carbon emissions by 60 percent by 2025.

The 25 pound daily tax on vehicles in central London’s Congestion Charge zone emitting 225 grams of carbon dioxide per km would apply in the same way as the normal 8 pounds daily charge does to all but the cleanest cars.

But to force home the environmental point of a congestion scheme that initially had no green goal, the exemption granted to residents in the zone will be removed from drivers of the polluting four-wheel drive and top-end luxury cars.

That means that the owner of a gas-guzzler who chooses to drive in the zone every day will end up paying 6,500 pounds a year for the privilege.

Should be interesting. “Gas guzzling” cars are something akin to Giffin goods (unlike normal goods, Giffin goods break the law of demand: as price increases, so too does quantity demand). Hummers, for example, are ever-more popular, despite being ever-more expensive to run – which is precisely where the popularity comes in.

A tax that makes such cars GBP6,500 more expensive to run in the city may send exactly the same “opulence signal”.

Ken Livingstone is gambling however that the other signal will be more important: by sending such a strong signal that society frowns so heavily upon their ass-headed mode of transportation, he is hoping to appeal at least to impure altruism (if not to their bank-books) in getting them to down-size.

Either way, it ought to be fun to watch.

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