Equity Implications of Parking Taxes

Abstract

Although considerable research has been conducted into the economic benefits of various congestion pricing measures including parking taxes, the equity implications of such initiatives have received less attention. As the policy debate shifts from the theoretical benefits of congestion pricing to the acceptability issues associated with implementing such measures, however, concerns about the equity of various proposals increasingly are raised. This paper starts with an overview of a congestion levy introduced in 2006 on off-street parking spaces within the inner city of Melbourne, Victoria, Australia. The paper subsequently defines equity in the context of congestion pricing and reviews empirical findings on the equity issues associated with parking taxes. The paper then explores how equitable the Melbourne congestion levy is and whether the tax may, inadvertently, disadvantage certain groups. The analysis reported on in this paper found that a significant proportion of drivers who contributed to the congestion problem did not pay the congestion levy, or else had their parking costs, including the cost of the levy, paid for by their employers. These findings raised concerns about both horizontal and vertical equity.

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