Tax Strategy Group

Economic Cost of Congestion in the GDA

was €5.8m in 2022 and €22.4m in 2040. Like the GDA, even with the range of planned public and sustainable transport interventions in these areas, the overall growth in the cost of congestion will not be offset by these alone.

Car dependency has many impacts, but congestion is the costliest. Dublin is considered to have some of the worst congestion in the world, with other Irish cities also ranking highly in this context. In addition to increasing emissions, congestion means lost time, heightened stress, increased fuel costs and drastically worse air quality. Additionally, it brings wider costs to the economy through the increased costs of doing business.

Tax Strategy Group

Tax Strategy Group (TSG) papers, published by the Department of Finance, highlight the potential risks that may come from decarbonisation of the economy over the medium to long term, and the need to prepare for eroding energy and transportation tax revenues from the overall Exchequer tax base. In its Budget 2022 TSG paper, the Department of Finance specifically noted the area of vehicle taxation and that changes will be required over the medium to long term, to meet the challenges being faced by the transport sector in decarbonising the economy and in moving towards net zero by 205032.

In 2017, the Department of Transport conducted analysis to estimate the Greater Dublin Area’s (GDA) cost of aggravated congestion30. In 2023, the Department carried out further analysis, building on the work in 2017. Results of this analysis show that the cost of congestion is estimated to be €336m in 2022 rising to over €1.5bn by 2040 (both in 2016 prices)31. Results show that planned transport interventions in the GDA are projected to reduce the rate of growth in the cost of congestion for bus users, but that they are not sufficient to offset the overall growth in the cost of congestion which is driven by factors such as population, employment, and economic growth.

It noted that while medium term options may encompass newer approaches such as road user charging, in the short-term, policy decisions will have to be made on how the State maintains or adapts revenue streams. In the context of this Strategy, there is now an opportunity to consider the variety of taxation measures, including road user charging, as part of a medium to long term strategy to achieve mutually reinforcing objectives arising from this strategy and wider fiscal sustainability objectives in the COTW report (see Recommendation 2 in Chapter 10).

An Alternative Future Scenario, which examined the impact of changes such as increased working from home as a result of the Covid-19 pandemic, was also modelled as part of the study. This scenario resulted in a reduction in the cost of congestion to €263m in 2022 and €1.4bn in 2040. This demonstrates that behavioural change interventions can have significant impacts in reducing the cost of congestion over the longterm.

In recent TSG papers, including for Budget 2026, the Department of Finance noted that in the medium to longer term, vehicle taxes may have to shift to a weight based vehicle tax or surcharge in order to protect the vehicle tax base33. However, it also notes that ‘in relation to environmental, road safety and congestion outcomes, expectations should remain modest as a weight-based tax is a complementary measure rather than a central pillar for change. More targeted measures, in relation to vehicle dimensions, speed enforcement, driver behaviour and infrastructure capacity are required in order to fully achieve the latter outcomes’.

In respect of the regional cities, a further report was published in May 2025, and featured the three cities of Cork, Galway and Waterford. Results of this analysis indicate that the cost of congestion to the Cork Metropolitan Area (CMA) were €57.5m (in 2022) and is forecast to rise to over €97.2m by 2040. In the Galway Metropolitan Area (GMA), the cost was €35.3m in 2022 and is forecast to hit €106.9m in 2040. In the Waterford Metropolitan Area (WMA), the equivalent figures

30 The Costs of Congestion - An Analysis of the GDA, 2017

31 The Economic Cost of Congestion in the Greater Dublin Area, 2022-2040

32 Climate Action and Tax Paper, Tax Strategy Group - 21/09, 2021

33 TSG 25-10 Energy Environmental and Vehicle Tax