Why Toronto Should Introduce a Commercial Parking Levy
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Why Toronto Should Introduce a Commercial Parking Levy

Parking spots aren't the best use of valuable real estate, but they should at least contribute to the city's well-being, argues Gideon Forman.

Photo by Neil Ta from the Torontoist Flickr Pool.

Photo by Neil Ta from the Torontoist Flickr Pool.

A June 2016 report [PDF] from the consulting firm KPMG suggests Toronto has something on the order of a million non-residential parking spots. That seems a rather large number, and makes one wonder whether this enormous land mass is being put to best use. What if we devoted some of this space not to vehicle storage but to affordable homes, schools, playgrounds, or vegetable gardens? Imagine growing food in areas that currently do no more than house our cars.

Even if we’re not ready to embrace this all-out land-use transformation, there is something else we can do, at least in the interim, to ensure parking spaces make a greater contribution to the city’s well-being. We can charge their owners a small levy.

The concept of a levy on commercial (not residential) parking spots is not new. A number of cities—including Montreal and Sydney and Melbourne, Australia—already have one. Montreal’s has been in place since 2010 and generates about $23 million annually for the city. In 2011, Melbourne’s levy brought in $45 million (Cdn).

A similar policy in Toronto would have many points in its favour.

The parking levy could bring the City a substantial amount of money. In its June report, KPMG looks at three scenarios, estimating the income from a levy of 50 cents, $1, and $1.50 per day per space. The net revenue ranges from $171 million to $535 million a year. Even at the low end, these dollars could, for example, allow the TTC to avoid transit fare hikes and $70 million in proposed service cuts. KPMG says the levy “could have a positive impact on the City’s ability to generate sustainable revenue streams.” This from one of the country’s most respected consulting firms.

The levy also boasts practicality and ease of administration. It is already permitted under the City of Toronto Act—it requires no additional permission from the province — and would be fairly cheap to operate. KPMG estimates it could be running in just 18 months and adds, “Given that there is already the municipal property tax system in place which could also potentially collect the parking levy, it is anticipated that there will be low administrative costs…”

Another virtue is the levy’s fairness. It could be higher in some parts of the city, and lower in others. For example, it could be more in the central business district and less in the inner suburbs. There could also be different rates for indoor and outdoor parking. This common-sense approach is employed in Montreal, which charges about $40 per year/square metre for outdoor spots in the business district, but only about $30 in other downtown areas. Differential pricing provides an incentive to reduce traffic in the busy city core while assisting land owners outside the core whose property is less valuable. To accommodate the needs of big, complex cities, revenue tools need to be flexible. The parking levy satisfies this criterion admirably.

Perhaps most encouraging is the fact the levy could incentivize public transit use and reduce congestion. A report prepared for Metrolinx in 2013 [PDF] looked at the Melbourne parking levy and found that, between 2005 and 2009, the levy area enjoyed a six per cent drop in weekday traffic. That’s not an enormous cut but, as every driver will tell you, any move in this direction is welcome. Referring to a potential levy in Toronto, KPMG argues, “it is likely that this revenue option will shift consumer behaviour towards alternative forms of transportation, improving congestion on roads…” A 2016 paper by Harry Kitchen and Enid Slack [PDF] published by the University of Toronto’s Institute on Municipal Finance and Governance concludes that the levy would be “ideally suited to handling problems created by parking congestion.”

Parking lots are a form of pollution. They sprawl across the city, facilitating the use of gas-powered vehicles, and cover up areas that could be deployed for more pressing things, such as food production. But as long as they’re around, let’s require them to make a bigger contribution to city-building. Let’s put a modest levy on those million spaces and in doing so generate hundreds of millions of dollars for transit and begin the process of reducing congestion in Toronto.

Gideon Forman is a Transportation Analyst at the David Suzuki Foundation.