It's an issue in cities worldwide: too many cars on too few roads. And Stockholm, Sweden was no exception, with over half a million cars travelling into the city every weekday. By 2005, average commute times were up by 18 percent from the year before.

That's why, in the beginning of 2006, the Swedish National Road Administration (SNRA) and the Stockholm City Council announced a trial Congestion Tax, a road charging system similar to those seen in Singapore, London and Oslo. The goal was not only to reduce congestion, but encourage ancillary benefits, such as improving public transport and alleviating environmental damage. The government's plan is to devote revenue from the tax to completing a ring road around the city. The trial period was scheduled to run from January to July 2006, and the city government decided to reinstate the tax in 2007. Here’s how it works.

To make the charging system work, the SNRA and the city had to find a way to recognise, charge and receive payment from vehicles. With help from IBM and its partners, a plan was devised to charge vehicles as they passed control points on the way in or out of the Stockholm city centre during weekday, rush hour times. The city implemented a free-flow roadside system using laser, camera and systems technology to seamlessly detect, identify and charge vehicles. In the plan, 18 roadside control points located at Stockholm city entrances and exits identify and charge vehicles depending on the time of the day. The tax per passage was SEK 10, 15 or 20 (about $1.50 to $3.00) depending on the time of day. The highest amount charged was during rush hours, from 7:30 to 8:29 a.m. and 4:00 to 5:29 p.m. The maximum amount per vehicle and day was SEK 60, or about $8.50.

The vehicle breaks the first laser beam, triggering the transceiver aerials as shown in Step 2.

The transceiver signals the vehicle's onboard transponder, capturing the time, date and tax amount.

At the same time as the transceivers, a camera photographs the vehicle's front license plate.

The vehicle breaks the second laser beam, triggering the second camera as shown in Step 5.

The second camera photographs the rear license plate, all without the vehicle slowing down.

Payment is debited from driver's account or paid via Web, a bank or retailers 7-Eleven and Pressbyran.

The road charging system has made a real impact in congestion and overall quality of life for the citizens of Stockholm. By the end of the trial, traffic was down nearly 25 percent. Public transport schedules had to be redesigned because of the increase in speed from reduced congestion. And even inner-city retailers saw a six percent boost in business.

But the benefits go beyond fewer cars:

• During the spring of 2006, 40,000 more travellers used Stockholm Transport on an ordinary weekday than the year before - an increase of six percent.
• The reduction in traffic during the Stockholm Trial has led to a drop in emissions from road traffic by eight to 14 percent in the inner-city.
• Greenhouse gasses such as carbon dioxide have fallen by 40 percent in the inner-city and by two to three percent in Stockholm County.

The new Swedish government reintroduced congestion charging in July 2007. And in the US, the federal government has allocated $130 million to implement similar congestion pricing systems.