By Nick Lovett, Planning Associate at Access
Workplace Parking Levies are effective and equitable pricing mechanisms to incentivize road users to switch to transit when commuting.
Internalizing External Realities
Virtually all economists agree that the best way to change behaviour and curb social and environmental externalities is to internalize them by imposing a visible and marginal cost. With road pricing, this is challenging to implement given there are always unintended consequences of a particular scheme such as simply shifting traffic elsewhere or disproportionately affecting low-income earners.
In recent decades, congestion pricing has been implemented in cities such as London, Stockholm and Singapore with the aim of making motor vehicle travel more efficient and convenient. However, following the Paris Agreement in 2015, the free movement of private autos is decreasingly viewed as an unmitigated good. Therefore, the policy and design rationale of road pricing schemes are beginning to shift.
Tolling schemes are expensive to design, build and administer and for many small and medium sized cities, traditional road pricing will not be a practical solution. Instead of pricing vehicles while they move, there is an opportunity to achieve many of the same benefits through pricing vehicles while they are stationary.
Source: Squarespace
Workplace Parking Levies
In the UK, many local authorities are in the process of implementing a Workplace Parking Levy (WPL). A WPL is a tax on employer provided parking, reducing the incentive for commuters to drive without targeting goods vehicles or others who need to make essential, non-work-related trips.
The City of Nottingham first introduced a WPL in 2012 and it has been credited as a major success—cutting pollution, boosting transit, and reducing car use. This is because the cost and availability of a parking space at a destination is a key determinant as to whether someone will choose to make a trip by car. The effectiveness of the scheme has led other local authorities who are in the process of replicating the scheme to fund a sustainable transit alternative, correct perverse tax distortions, and manage congestion.
Canadian Perspective
WPLs have enormous potential to correct unfair distortions in transport and tax policy. In Canada, employer provided parking is often a tax-free benefit whereas employer provided transit passes are not only subject to tax, but employees are no longer able to claim tax credits on passes.
A WPL is a highly effective second-best and complementary alternative to a comprehensive road pricing scheme which requires a large amount of time and resource to set up and administer.