A tax on parking could raise more than $500 million for Toronto. The city’s unprecedented money crunch has given the idea new traction

Parking levies exist in other cities, so why not here?
Thestar.com
Jan. 19, 2023
Lex Harvey
David Rider

The answer to Toronto’s money woes could be hiding in its parking lots.

Several downtown city councillors this week threw their weight behind an old solution to Toronto’s budget crunch: a commercial parking levy -- or a tax on the city’s non-residential parking spots.

It’s an idea that city politicians have flirted with for a decade, each time throwing out the potential tax over logistical headaches or concerns over how it might affect businesses, many of whom are now grappling with pandemic impacts.

But with Toronto searching for paths out of an unprecedented financial crisis, plus an urgent need to prioritize less-polluting transportation, some experts say now could be the time to follow the lead of cities such as Montreal and start charging businesses for their parking spots.

“We have a lot of oversupply of underpriced parking in the city and that makes it more attractive to drive,” said Steven Farber, transportation geographer and spatial analyst at the University of Toronto.

“It represents a missed opportunity on the revenue side. But more importantly, I think it’s a missed opportunity to help shape the transportation system, to make it more sustainable and make transit, walking and cycling more attractive relative to a car.”

Councillors Diane Saxe (Ward 11 -- University Rosedale), Chris Moise (Ward 13 -- Toronto Centre) and Alejandra Bravo (Ward 9 -- Davenport) are touting parking taxes as a potential solution to transit funding shortfalls, following the TTC’s recent announcement that it planned to cut service and hike fares in 2023, citing stagnating ridership.

“This is exactly why (the city) needs to bring in commercial parking levies, now,” Saxe tweeted Wednesday morning in reference to the TTC’s plans, adding she’d like to see most of the revenue from a potential commercial parking levy go to transit service improvements.

“We need sustainable, reliable funding to make sure that our communities, our city, our citizens have the resources needed to make sure that our city runs accordingly,” Moise said Monday in a press conference accompanied by Bravo, Saxe, and transit and environment advocacy groups, TTCriders and the Toronto Environment Alliance.

In a statement this week, Tory spokesperson Taylor Deasley said the mayor “supports looking at any reasonable new revenue tools for the City of Toronto” including yet another look at the parking levy.

Parking levies, in one form or another, are used internationally in cities such as New York, Los Angeles, Chicago, Sydney and Melbourne. In Canada, Montreal charges up to $2 a day per downtown parking space, while Vancouver applies a 24 per cent parking tax to the price of parking rights.
In Toronto, parking levies to fund transit and other city services have been proposed and ignored -- or rejected as a political hot potato -- many times between 2010 and last year, when a city staff report pegged potential annual revenues at between $191 million and $575 million.

So why does the parking levy keep getting parked?

In 2013 then-mayor Rob Ford, a self-proclaimed champion of motorists, surprised many by briefly backing a parking levy to help fund subway construction, only to turtle amid backlash. Councillors ended up debating it with 11 other potential levies, only to reject all.

In 2016, city council under Tory again weighed the thorny question of squeezing more money out of businesses. Again, parking levies stalled.

People involved in that debate say some suburban councillors demanded exemptions, including for houses of worship with huge parking lots. Those councillors and Tory were also lobbied intensely by shopping mall owners and commercial real estate firms who said the levy would be disastrous for their businesses.

Mostly though, said one source involved, who requested anonymity due to confidentiality requirements, the “difficult” parking levy was rejected in favour of a push to toll the Don Valley Parkway and Gardiner Expressway.

However, that council-endorsed windfall vanished when then-premier Kathleen Wynne, under pressure from MPPs representing 905-belt drivers, reversed her position and slammed the brakes on tolls.

Could this outcome be different?

Political resistance might have eased to the point that parking levies can be entertained, given the city’s financial disaster and public acknowledgment of the environmental toll taken by vehicles, said Cherise Burda, executive director of city building research and innovation at Toronto Metropolitan University.

“We have to be mindful of our small-business recovery but we need to dust off old reports on revenue tools and look at them with a different lens,” said Burda.

But to Jonathan English, transportation director at the Toronto Region Board of Trade, the benefits of imposing a new tax on businesses when many are still struggling with the effects of the pandemic may not be worth the risks.

Commercial parking levies are not one-size-fits-all. Proposals range from taxing only spots in the downtown core to exempting small businesses and focusing on malls or other large parking lots.

But each comes with its complications, English said. Taxing parking in areas that are not well-served by transit -- likely shifting the added parking cost onto the consumer -- raises equity issues.

Conversely, “focusing a tax on a place like the financial district would hit a lot of buildings that have already been hit hard by high vacancies and a slower return to work,” he said.

“We want to incentivize people however we can to come back down, to come back to the office, come back to the stores and restaurants.”

Farber said the answer to all these concerns is better transit, which in his view, could be at least partially solved with a new revenue tool like a commercial parking levy.

“Why aren’t small businesses worrying about transit services being eroded in the city and customers not being able to get to their store by transit?”

“Transit can move far more people more efficiently.”