We all have to pay part of the cost of much needed infrastructure. As a result, revenue tools are a difficult subject for everyone. Here are some facts around the potential implications of a new parking levy.
The City is considering a parking levy amid other proposed revenue tools to help fill a projected budget gap of $483 million for 2017.
BILD has been working with a coalition of business and real estate organizations to study the possible effects of these potential new revenue tools on both businesses and consumers. We need infrastructure and recognize that it’s getting increasingly more challenging for people to live and work in the GTA as costs continue to rise and the city becomes more unaffordable.
Today, most shopping centres, strip malls and local grocery stores provide parking to their customers at no charge. The new parking levy would be a hidden tax that would impose a per day, per spot fee on all commercial property owners who provide parking, including parking spots that companies provide their employees.
To offset the new levy property owners or tenants would pass on the added cost to consumers, probably in the form of increased prices for everything from groceries and clothes to dry cleaning and hair cuts. Because it is hidden in the overall cost of goods and services, consumers would not necessarily realize that they are paying a parking levy. It’s different from a sales tax which is a direct separate charge on goods and services sold.
The levy could have an impact on the city’s business competitiveness and economic development. Research done by the coalition shows that it could be equivalent to a 44 per cent commercial property tax increase on businesses across Toronto.
This new proposed revenue tool would impact all businesses, large and small. It would be passed onto retail, office and industrial tenants and would disproportionately be paid by small businesses, including small tenants in large malls that probably need only a few spots but would end up paying an unfair share. More strain to their bottom line could make it tough for their business to survive.
Vancouver’s attempt at a similar tax in 2006 proved to be costly to administer and caused many issues and misperceptions. Revenue expectations are usually inflated, and exemptions and outdated parking space inventory records add to the administrative complexity.
In 2007, Toronto considered a parking tax but dismissed it due to low projected revenue, administrative challenges and concerns over transparency around the collection of charges and the impact it could have on large malls and other retailers that provide free parking such as grocery stores, shopping centres and strip malls.
The City is looking at a variety of potential revenue options such as a development levy and additional municipal land transfer taxes. Both would impact consumers and businesses. It is important to understand the impacts of each before a decision is made.
The cumulative effect of taxes, fees and charges is becoming increasingly more challenging for business competitiveness. We need long-term solutions that are fair and will make Toronto more competitive, affordable and will maintain and attract businesses and job growth for the future.