Targeted rates seem all the rage these days with Auckland Council starting with the Interim Transport Levy under the previous administration, what became dubbed as the Bed Tax in the last annual plan, and now the myriad of water quality and environmental ones in the new Long Term Plan.
I can understand their popularity as people like to know what they paying for, and seem more willing to tolerate targeted rate rises with a clear core agenda as opposed to general rates rises which attract opposition.
An idea that has been floating in my mind since the debate over the Bed Tax has been the possibility of a Targeted Rate on Parking in the City Centre and possibly Metropolitan Centres. The targeted rate on parking would
- Act as a disincentive to land banking in major centres like the City Centre;
- Support mode shift to Public Transport and Active Modes;
- Raise revenue which could be used for City Centre Development.
Currently, much of the land that is being land banked often sits as parking. The targeted rate would increase the opportunity cost of land banking creating a large incentive to either develop the land into more productive users or for the owner to dispose of the property to someone who is willing to develop.
Absent a Land Tax, our taxation system creates a perverse incentive in which productive endeavours such as adding value to land by improving the land by building homes results in increased tax but sitting on land doing nothing does not, thus our tax system encourages land banking and speculation over development. A targeted rate on parking could help address this quirk.
By reducing the incentive to providing parking in centres and encouraging the development of parking into more productive uses this increases the cost of driving which will encourage a mode shift towards using public transport, cycling, or walking.
Revenue raised could also be used to invest in public transport and active modes driving even more mode shift.
The extra revenue could be a boon to urban development and regeneration for Auckland Council and Panuku. The extra revenue raised could go a long way to helping fund the City Centre Master Plan or Panuku projects like Transform Manukau or Unlock Henderson.
Sydney has a system that we could emulate called the Parking Space Levy which applies a levy to any residential and non-residential off-street space used or reserved for a motor vehicle.
The levy was introduced in 1992 and was increased from $950 in 2009, the scheme in 2008 before the rises was generating over $51 million in revenue for the state a year.
Melbourne has a similar system called the Congestion Levy introduced in 2005 with the levy greatly expanded in 2015 with the introduction of a category 2 zone. Category 1 levy is now $1410, while Category 2 is $1000. The levy raised $39 million in 2007.
Perth also operates a similar system, while cities in other countries operate a tax on paid parking rather than a per parking space levy such as the two Australian examples above. An interesting report by the Victorian Transport Policy Institute looks at worldwide examples and different ways of taxing parking with the preferred being a levy on spaces over a tax on paid parking.
In general a commercial parking tax (a special tax on parking rental transactions) is relatively easy to implement but tends to contradict other planning objectives. It discourages pricing of parking, encourages sprawl, and its cost burden tends to be concentrated in a few areas, such as major commercial centers, campuses and hospitals.
A per-space parking levy (a special property tax applied to parking facilities) is more challenging to implement because it requires an inventory of qualifying parking facilities, but it encourages property owners to reduce parking supply (particularly seldom-used spaces) and manage their parking supply more efficiently, and it encourages pricing of parking. As a result, it encourages more compact, accessible, multi-modal land use patterns and reduces sprawl. Its cost burden is more evenly distributed.
I think Auckland Council should seriously investigate a Targeted Rate on Parking Spaces for the City Centre and potentially the Metropolitan Centres as well.