| Sumario: | The article examines the impact of taxes on road congestion. The standard treatment of road congestion assumes that the value of time is the same for every journey, regardless of whom it is made by. Given this, the money value of the time cost of journeys is a unique function of the number of journeys, independent of demand conditions. This is a fairly radical simplification, and it is natural to ask how the policy conclusions about optimal congestion taxes are modified when the value of time is allowed to vary between journeys. The analysis shows that the tax will discourage journeys with low time values and will probably encourage journeys with high time values. Thus, leaving aside the disposal of its proceeds, the tax may well be regressive. The money value of the time cost of journeys is no longer a simple function of the number of journeys. It depends on which journeys are being made, and not only on how many. However, the time cost measured in units of time is an unambiguous function of the number of journeys. Thus, the free market equilibrium can be obtained by constructing a new demand function as a function of journey-time. This analysis of progressivity/regressivity has so far ignored the substitution effects of the tax and considered only the effect of cost differences applying to journeys made before and after the tax. In addition, one now needs to take into account the costs accruing to those low-income travellers whose journeys are deterred by the tax, and the gains to those high-income travellers whom the tax encourages to travel.
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