– Diana Furchtgott-Roth is a senior fellow at the Hudson Institute and former chief economist at the U.S. Department of Labor. The opinions expressed are her own. —

Christmas Day in most cities will be serene, free of weekday traffic jams as workers enjoy a Thursday that is free of normal routines.  Many commuters wish that the free-flowing driving could last all year long. Traffic congestion wastes drivers’ time and gasoline, pollutes, reduces employment, and pushes businesses and shoppers away from cities.

There is hope. New global positioning system technology and congestion pricing can reduce traffic jams.  In mid-January, 10,000 transportation professionals, including people from the incoming Obama administration, will convene in Washington D.C. at meetings of the Transportation Research Board, part of the National Academy of Sciences, to discuss solutions.

Road use varies with time of day. Time-of-day pricing can encourage drivers to shift non-essential trips to less busy hours, and eliminate some trips altogether.

London’s system of road pricing, with cars charged $16 to enter the center, is held up as a model for other cities. But its main flaw is that drivers pay flat fees, and are not charged by miles driven or by routes taken.

A better scheme would be to have drivers pay per mile, with higher charges on more heavily-used streets and in periods of heaviest congestion.

With prices of transponders and GPS falling, sophisticated and efficient systems are now possible. In some places they are optional, with drivers volunteering to participate in exchange for a reduction in license plate fees or even a credit against fuel taxes.

Here’s how this could work. GPS devices could be given to drivers who choose to participate—one per car—and drivers pay as easily as they are now paying for cell phones or E-ZPass tolls.  Participating motorists could be exempt from license-renewal fees, but would pay road charges instead, charges that could vary by type of road used and time of day.  Driving in rush hour along a busy road would cost more than driving on a little-used road late at night.

In Oregon, GPS-based distance measurements are designed to replace fuel taxes it now levies to pay for the use of its roads (for the full report, click here). Oregon would not immediately require all vehicles to have GPS. At least to start with, motorists would have a choice of paying either fuel taxes or mileage charges.

Efficiency in road pricing would relieve congestion. But it raises the politically thorny question of what to do with the revenue.  In my view, cities must resist London’s unpopular inclination to use revenues to finance increased general spending, a measure defeated in New York and in Manchester, England.

To be acceptable to voters, a new road charging scheme should:

•    Use advanced GPS-based systems, of the kind being pioneered in Oregon;

•    Apply congestion pricing as part of a more general reform of financing road use, such as phasing out fuel taxes;

•    Use monetary incentives, such as abolishing annual licensing fees or introducing new charging schemes on a voluntary basis; and

•    Ensure that new revenues improve financing and use of roads, rather than for public transportation.

Employers could help, too. Some firms could enable employees to avoid high-priced peak driving rates by allowing flexible schedules or even telecommuting.

Critics claim congestion pricing is unfair to lower-income drivers. But if the system were voluntary, only those who wanted to participate would do so, and could receive rebates of fuel taxes.

Alternatively, low-income motorists could be given credits on their bills—cash incentives—to take part, ensuring that they have the opportunity to save money by avoiding peak-hour driving.

To reduce pollution and protect themselves from choking on traffic, cities must find a way to reduce congestion and enable people to travel more quickly and easily.

This Christmas Day, as we enjoy uncongested roads, we should think of a way to keep them like that all year round.

You can contact Diana Furchtgott-Roth at dfr@hudson.org. For previous columns, click here.