Last year I rented a car at Heathrow and drove into central London, knowingly incurring the £5 congestion charge. (Enforcement is by cameras that catch license plates. You have to phone in and pay by credit card -- that day. Fine for being late: £100.) Next time I’ll take the bus. Not only was it harrowing to drive on the left-hand side down narrow London streets, but starting today the congestion fee is £8.

The £5 charge was already effective at reducing traffic congestion. Bloomberg reports that there has been

an 18 percent decline in traffic since the introduction of the toll in February 2003 […]

average driving speed increased to 10.3 miles an hour from 8.9 miles an hour, according to Transport for London, the authority that oversees the capital's public transportation.

So what’s the rationale for raising the charge to £8? Because it’s been discovered that £5 is too low for efficiency (i.e. too low to fully internalize the traffic cost each additional car imposes on others, as economist A. C. Pigou would have recommended)? No. It’s all about the revenue. Writes Ben Webster in The Times:

Ken Livingstone, the Mayor of London, is imposing the increase largely because he will make an additional £35-45 million in annual profit. […]

Mr Livingstone promised two years ago not to raise the charge for at least a decade. He also stated, in November 2003, that “the issue of the congestion charge is not about raising money”. But after being re-elected last summer, Mr Livingstone announced that he wanted to raise extra money by increasing the charge.

British economists who supported the congestion charge as an efficiency measure must now be having second thoughts. As Brennan and Buchanan’s Leviathan model predicts, the level of the charge is now being set not for the sake of traffic efficiency but revenue-maximization. In the tragedy of the fiscal commons, Brennan-Buchanan trumps Pigou.