There's no such thing as 'free' parking

"There is no such thing as free parking — even if you work at a parking lot." This Star headline, was prompted by a judgment made recently by the Honourable Justice T.E. Margeson where the appellant was the Toronto Parking Authority (TPA) and the respondent the Minister of National Revenue.

Essentially the ruling states that a parking space provided to an employee by their employer should be considered a taxable benefit that would attract Canada Pension Plan contributions.

If the judgment were applied further afield there could be tax implications for anyone who drives to work and parks their car in a space provided by their employer. Considering that an estimated 70 per cent of Canadians drive and park their cars free of charge on their employers’ property the financial ramifications for workers and their employers could be profound.

The challenge, of course, is that if an employer decided to purchase a transit pass for their employee instead of giving them a free parking space to use each day, their investment in transit would be considered a taxable benefit.

If you consider this point in the context of the current transit dialogue that’s gripped the city it seems that at the very least our tax laws should be aligned with our community goals. If we want more people to use transit and use their autos less, then commuters deserve a choice and we could start by acknowledging that parking is not free, it’s a benefit and we should have to pay for the luxury.

Determining the economic value of a parking space at a TPA lot or garage is easy; they have a big sign out front with the prices listed. On this point the parking authority argued that it does not lose money because the lots aren’t full, and that no one is guaranteed a space. Unfortunately for the TPA and its employees their arguments concerning the value of the benefit didn’t sway the court and if they park without paying, it’s a taxable benefit.

At a suburban office park the value of an "employee parking" space is more difficult to assess, but it can be done. Land values in most of the GTA have approached the $1 million an acre mark, and the cost of building and maintaining a parking lot can range between $20 and $50 a month per parking space.

So the parking space that millions of Canadians use each day does have a value and given surface parking lots are one of the more dominate land forms in our cities it might be useful if we take a closer look at how much all this free parking is actually costing us.

About Lorenzo Mele

Comments

[Gary]

I think you'll find that most companies do not provide free parking for their employees but rather levy a monthly fee for the use of the space.

[Cornwaller]

The sole reason for taxes is to raise money for government expenditure. Social or community goals have very little or nothing to do with taxation. People are willing to may more to use their cars because they are more comfortable, faster and more convenient than transit. Make transit the same way and people will flock to it.

[Just a thought]

What's next the government is going to start taxing construction sites as parking? What about road workers how close down part of a road so they can park. A better choice would to remove parking and public transit from a taxable benefit. Which would allow companies to provide what they think is the best solution for the company and the area of the office. If this Carbon Tax Scheme (Tax that goes to someone's pocket, like the 5 cent grocery bag tax) is put in place they might be able to use the public transit tickets to offset the carbon emissions. Plus generate more money for these government run public transit companies.

[Mark Turner]

Before doing this, let's talk about the elephant that's in the room. "What elephant" you say? The elephant is the free, or discounted on street parking that is provided everywhere by our municipalities. Lets charge for that parking in an amount commensurate with the cost of constructing and maintaining that roadway. As it is, cities subsidize every business that relies on available (and usually free) on-street parking for it's deliveries and customers. On street parking should be eliminated if we are serious about not constructing more roads. If we insist on providing on street parking, then the cost must reflect it's cost to our public coffers. Monies received can be used for transit, bike lanes, and dare I say it, more roads.

[Morty]

An example of such taxes: Translink, Greater Vancouver's regional transportation authority, levies a parking tax of $0.78 per square metre of parking space and a separate 21% sales tax on parking, with the revenues used primarily to fund public transit throughout the region. The business community, unsurprisingly, did its best to rally opposition to the last round of tax increases by fear-mongering about the effect the new tax rates would have on the local economy but, also unsurprisingly, those fears have shown themselves to be unfounded.

[Dennis]

Finding new ways to tax the working class citizens is never something I would agree with. Why not focus on spending tax dollars wisely instead of always looking to create more taxes?

[Shelby]

We seem to have an endless supply of creative ideas to extract more money from Canadian paychecks. Can we please find just 1 or 2 people to work on reducing taxes and inefficient government spending? Government bureaucrats have neither the ability nor the desire to spend hard earned money as efficiently as the person who actually earned it.

[analyst analyzer]

OMG.. what if I decide to go to work using TTC half the time and the other half driving. Do I have to pay taxes on the parking space for 1/2 the year or the full year? What about other bennefits, such as subsidized lunches in the Cafeteria? or having a picnic bench outside to eat? or coffee/tea in the pantry?

[ArtVandelai]

Great article! For every resident of a typical suburban city, there are many parking spaces maintained - by private businesses, by employers, and by governments, in hopes that someone will come along and occupy that space for the purpose of shopping or utilizing the services provided by the business.

All that land has to be paid for by someone. It generates no revenue unless there is a parking fee. The costs are embedded in the price of the goods that we buy. They are embedded in the costs of transportation (probably 20% or more of the cost of a monthly GO pass pays for the maintenance and acquisition costs of hundreds of parking lots in addition to the cost of operating the trains).

The opportunity cost of having high-value land used to store vehicles is a staggering hidden cost that adds to our tax burden, in addition to the cost of everything we buy.

[Cecil]

Before you go looking for new taxes to hammer the average joe with, why don't you look at the spending side of the equation first? You cannot punish people who have to drive because they have no other choice, especially if you live in Brampton and work in Mississauga. Unless you are saying such people should spend 3 hours on the bus, transferring between several buses, going to and from work every day.

[John]

Ugh. Stop forcing behavior preferences on me through taxation. And stay out of my driveway.

[The Duffer]

Oh yea, what a great idea! Lets tax vehicles when they move, i.e. road tolls, taxes on energy, and then tax them again when they DON'T move, i.e. tax them for the space they're taking up while they're sitting still. Maybe while we're at it we can attach oxygen monitors to babies when they are born, and then we can tax the air that they breath! Or implement a tax everytime their heart beats. There, see, I can be creative like a TorStar blogger too ...

[Gabrielle]

This is getting to be ridiculous!! The Government spent all that money (most of it being the tax-payers cash) to bail out GM and Chrysler because of the ramifications it would have had on the economy and employment. But now because I want and/or need to drive to work I'm going to be penalized and told to pay MORE taxes? Here's an idea, if transit needs more money, get it from the transit users. Between a car payment, insurance, gas and maintenance I'm coming in at at least $500 more per month than those purchasing a monthly transit pass. Not to mention the extra fees we pay for licensing. Thanks to that newest tax introduced in 2008 I'm now paying $132/year to license my car. That's almost $100 MORE than other Ontario cities. Let's see what happens when everyone stops buying cars and paying for things like gas, insurance and maintenance. For one the ripple effect within those industries would be enormous. Then try piling all of these extra car-less people onto the subways and street cars. Let's have a look at what the real problem is here and stop taking it out on car drivers/owners. And by the way, those employers are already paying property taxes on that land. Don't try to add a new sub-property tax for parking. This is getting out of hand!!

[Abracadabra]

This is ridiculous. Is 'parking' my butt in my work chair considered a taxable benefit too? What about using the company washroom, phone, microwave, etc. Leave the taxpayer alone already.

[Waterboy]

Tax, Tax & more Taxes. This is the answer for every problem. Our elected officials are mentally bankrupted. Just look at what happened to our gas tax for roads. Now they suggest we pay tolls when they throw our road tax money in the general coffers and deliver third world roads. Ever driven down Bloor St lately??

[KD]

If we had a viable transit alternative, taxing parking spots would be just dandy , as well as toll roads and all the other nonsense. The biggest problem is that WE DO NOT HAVE A PROPER FUNCTIONING WORKING PUBLIC TRANSIT SYSTEM.

I live at Yonge & Eglinton. I work 5 min from the Airport. Travel time by car on the busy 401 = 30min. By transit 2.5 hours.

2.5 hour travel time within a city limits is not acceptable. Unless you are only travelling within the downtown core, transit does not work. FIX THAT first. Once there is an alternative to driving, then you can talk taxes(fines/penalties) for those that do not use it.

[Jordan]

John writes: "Ugh. Stop forcing behavior preferences on me through taxation."

Agreed. While they're at it, the gov't should lift all taxes on alcohol and cigarettes.

[NewDaddy]

There is no free lunch either. Do you think that your fellow GTA citizens being nickel and dimed to death by everyone from banks to property and other taxes, to increases in price for electricity, gas, cable, phone, cell, internet, etc. will not come at a cost? Now it's parking and road tolls. What's next? Pay per sheet of toilet roll? Get a grip. Just because you're well off and have money to throw around doesn't mean that a lot of people aren't stretched to the limit and living pay cheque to pay cheque. When that middle class breaks down #1 we will see here a repeat, or worse, of what happened in the U.S., and #2 there will be only 2 classes left: the rich and the poor. So, before you go hurrying towards a tax everythign to make transit more appealing think long and hard on which side of that divide you will fall. You see, the rich will still be a minority so chances are that you wil have...not.

[Happy Harry]

It takes me twice as long (no this is not an exaggeration) to use public transit than it does to drive to work. Make a better system and stop trying to steal my money to pay some over-priced public worker.

[Curt99]

Tax free parking spaces will somebody tell these people this does not work if you want users to use public transit make it free.
case in point how many have gotten of oil since we taxed it biggest lie these pin heads have is using taxes as a deterent to anything

[Jordan]

Gabrielle writes: "if transit needs more money, get it from the transit users"

The TTC already has a very high "recovery rate". Most of its operating costs are covered by rider fares. Typical American cities have a much lower ratio (state governments make up the difference).

The Ontario government helps buy buses and build subway lines in Toronto, but does not pay for operating expenses. About 5/6 of the operating expenses are covered through fares (at $3 per ride) and the remainder is covered by the City of Toronto through property tax and licensing revenue.

I challenge Gabrielle to provide me with an example of a jurisdiction that operates a large public transit system without any government support.

[Natalie]

I get a parking spot at work and I pay tax on it as a taxable benefit. I'm only surprised that not everyone else in Toronto is paying.

[peterCLARKE]

Folks all this free stuff is NOT free. Taxpayers have to foot the bill or have we all forgotten that all these so called free services have to be paid for and guess by whom, us the taxpayers.

There arleady eixsts a Tax Credit for Public Transit, as a federal income tax credit for weekly or longer duration public transit passes and electronic payment cards.

The Government of Canada is encouraging the use of public transit to reduce air pollution and greenhouse gas emissions and we are all apyihng for it.

If your monthly transit pass costs $100, the amount you can claim in 2008 would be $1,200, resulting in a tax credit of $180.00 (twelve months multiplied by 15%).

At a minimum you need to keep your expired public transit passes and receipts for electronic payment cards to support your claim. Visit the Canada Revenue Agency Web site for additional information about how to qualify and claim the tax credit for public transit.

[Frank Goytisolo]

You are comparing apples to oranges when you say a parking spot can be exchanged for a TTC pass. A parking spot is useless without a car, and if a company provides a car, it is a taxable benefit, just like the TTC pass. The parking spot is equivalent to your coat hanger at work -- or should that be taxable as well??

[Jordan]

Most drivers under-estimate the impact that the TTC has in reducing road congestion in Toronto.

A typical morning rush-hour Yonge subway train carries 1,000 riders south into downtown T.O. If you were to load the riders from one train into cars, two to a car, the line of vehicles would fill an entire lane of the DVP from Lawrence down to below Eglinton.

If you're a committed driver, you should lobby for TTC service to be increased. Those who take the subway instead of driving help you get to work faster!