Parking levy could put brakes on small businesses
We all have to pay toward the cost of much-needed urban 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 of Toronto is considering a parking levy, amid other proposed revenue tools, to help fill a projected budget gap of $483 million for 2017.
The Building Industry and Land Development Association (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 improved infrastructure and to recognize that it is 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 would be hidden in the overall cost of goods and services, consumers would not necessarily recognize it as 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.
Retail, office and industrial tenants would all feel the impact. The levy 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. Revenue expectations are usually inflated and exemptions and outdated parking space inventory records add to the administrative complexity.
Toronto considered a parking tax in 2007, but dismissed it due to low projected revenue and administrative challenges. There were also concerns over transparency around the collection of charges and the impact such a levy could have on large malls and other retailers that provide free parking.
City officials are looking at a variety of potential revenue options, such as a development levy and additional municipal land transfer taxes. Both would have an impact on 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 making it increasingly more challenging for GTA businesses to compete. We need longterm solutions that are fair and will make Toronto more competitive, more affordable and will maintain and attract businesses and job growth into the future. Bryan Tuckey is president and CEO of the Building Industry and Land Development Association (BILD) and is a land-use planner who has worked for municipal, regional and provincial governments. Find him at twitter.com/ bildgta, facebook.com/bildgta and bildblogs.ca.