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This is part of a multi-part reflection I've been doing following the death of my friend, Mark Baumer . There's nothing graphic i...

Consumers Don't Pay the Parking Tax, Garages Do.

I was happy that reader Andrew Fenelon (a demographer who you should never challenge on the population of any town or city--no really) sent me this, but I realized how important it was only after reading beyond the headline:
Yes, it's great that cities around the country have parking taxes, and greater still that some are actively raising theirs. But the coolest part of all is who pays. Stealing a block-quote from the article:
In the short run, a change in the parking tax has no impact on the parking rates paid by the consumer. Consequently, the parking facility operator pays the entire amount of a parking tax increase. Parking facility operators face the same short run problem every day—how to maximize revenue. 
In other words, parking operators are already charging as much as they can and the price consumers pay is determined by the number of spaces and the demand for parking, not by the level of taxes. The level of taxation and the other costs of operating a facility do not affect the price charged or the number of spaces available unless the costs are so great that the operator shuts down the facility. 
In the long run the story is quite different. An increase in parking taxes discourages the rejuvenation of aging facilities, the replacement of facilities lost to development, and the construction of additional facilities. Thus higher parking taxes will decrease the long-run supply of parking, will increase the cost to the public of parking, and will decrease profits to owners of parking facilities. 
Further, should an additional parking facility be required, a higher parking tax implies that the facility will require larger subsidies to develop than it would in the absence of the parking tax increase.
The article goes into a lot of detail on who pays the parking tax, giving case studies, and talking about its affect on land-use and transportation. 

What's awesome about the idea that consumers don't pay more is that it removes a huge constituency from the column of anti-parking tax and puts them in, at the very least, the neutral category. When parking is offered in the non-competitive market that it is, owners of garages and lots are already getting the highest price they possibly can to still maintain customers. Joe Paolino's crocodile tears for the secretaries of the world is even shallower than it appeared at first glance.

Some time ago, I did an analysis of who I thought might pay the parking lot tax at RI Future, and argued that the price could go either way, but was more likely to be swallowed by owners of lots due to inelasticity. It's really a sweet feeling when a hypothesis I grounded in educated conjecture is backed by applied studies of the real world and shown to be true.

Now, it's important to note that many cities tax parking without some kind of dividend. The proposal for a Providence parking lot tax returns 100% of its revenues as lower property taxes. So there's already  plenty of reason to feel that even the non-resident consumer would get a fair shake in return for a higher parking fee if there was one--cheaper (or better) goods at the business they visit in return for more expensive parking. But this is better still. The parking lot/garage owner is caught in the middle and swallows the costs, consumers who park pay the same, and businesses get a tax cut, all while incentivizing infill.


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