From “a whole minute”:
The Invisible Sales Tax for Parking
Whether you drive or not, you are paying a sales tax for parking amounting to about 1% of all your retail purchases.
I have long wondered: When I shop, how much am I paying for the parking lot? A supermarket lot is usually as large as the store itself, if not larger. That land doesn’t come cheap. Even plain asphalt has construction costs too. The only way the retailer can recoup that investment is by increasing prices. Free parking therefore amounts to a subsidy from non-drivers to drivers. But is it significant? Can it be calculated?
Calculating the Cost
The largest costs for operating a retail store are typically stock, staffing and rent. According to the Business Development Bank of Canada, rent amounts to approximately 8.5% of all costs.
The cost of rent is proportional to the cost of developing the building in the first place. This includes parking, regardless of whether it is in a parkade (spaces typically cost $40,000 and up) or surface parking (where costs are closer to $10,000 per space). The Victoria Transport Policy Institute cites 10% as the proportion of development costs that go parking for the typical building development.
If, on average, rent is 8.5% of costs, and parking is 10% of rent, then parking is 0.85% of the retailer’s costs. The retailer covers those costs by passing them on to the consumer. You and I are paying that 0.85% …
It’s a Tax
This subsidy is like a tax, as governments require developers to build parking. For consumers the effect is the same as if the government collected the tax and built the parking itself. This is effectively a privately administered sales tax.
As a result, drivers are being subsidized by those who walk, bike, or take transit. When you walk to your supermarket, 1% of what you spend is going to those who drive instead. …
This is an excellent, excellent argument for removing parking requirements.
If it is an argument for the transit plan, it’s a pretty indirect one. No amount of transit will reduce the number of parking stalls if its the law to build them.
Somewhat like the argument for transit from the health perspective (build transit to reduce Alzheimer’s), I think we should avoid making arguments that appear too convoluted.
You and I are paying that 0.85% …
Absolutely right.
remember that argument made by some
” $258 annual increase per household he been parroting for weeks is also horribly wrong, and completely ignores the amount that businesses will contribute.”
I then mentioned it was a slippery slope to engage on this terrain: thanks to provide a clear example why.
As a person who has done all grocery shopping for a family of four for 20 years, using all the possible transportation modalities at different times to get to all manner of different food outlets, I am figuratively bent over and convulsed with laughter at this analysis.
Sorry, I forgot to ensure that would post under my real name. I hope this does…
sincerely, Karin Litzcke
I bought a $30 folding grocery cart from Canadian Tire several years ago and now I walk to the grocery store to do my grocery shopping. It’s about 2km round trip, and I figure I’ve recouped the cost of the cart several times over by not driving, and it certainly hasn’t hurt my health.
That’s lovely for you. I’m not quite sure why you would post this statement as a reply to my comment though, because that makes it look like a suggestion directed at me, that I should use the same shopping method as you. With all due respect, however, you have no idea how many groceries I buy, nor what my physical ability is to walk and pull a cart, nor where I live relative to where I shop, nor whether my grocery shopping is done on a special purpose trip or en route home from other destinations, nor how often I shop, nor who is with me when I shop, nor how much time I have, nor whether this is in fact already something that I do. So maybe you meant to post on the main thread as a general interest comment?
You’re quite correct, I have no idea how capable you might be to shop for groceries by any method other than by car.
However I see an awful lot of perfectly healthy people doing their grocery shopping by car, many of whom take home fewer groceries than I do. So when I read that you laughed at the idea of doing shopping by any means other than car, it seemed like a perfect opportunity to point out that it doesn’t have to be that way.
Many people do things because that’s the way they’ve always done them. It doesn’t necessarily mean it’s only way to do them, nor even possibly the best way to do them.
I laughed at what I perceived as a blind spot in the analysis, not the idea of shopping another way. My post said I shop in every conceivable way, and I’d suggest that anyone who reads this blog would be at least minimally aware of alternatives. People who shop only on foot or by bicycle sometimes appear not to understand how people use their cars and what the car allows them to do that cannot be done on a bike or on foot with a cart, and so on. For example, do you check what else they have in the car or where else they have been, who they have driven somewhere, etc, when you judge whether their grocery load justifies their car? Let’s say they took their elderly parent shopping or to the doctor, for example, and are now picking up groceries on the way to their own home for dinner. Would that be good enough for you? Or would you require them to go home first, get their cart, and walk to the store and back?
My late wife needed to use a wheelchair, so when we went anywhere it was in our van. So I certainly understand the need for car trips.
But I’m equally convinced that there are an awful lot of car trips being made for which alternatives exist.
And yet you are unable to imagine that those drivers you are looking at have any comparable forces acting on their lives. We are all judgmental, of course, and we’re probably often right. But there’s a boundary between being right and having a right to control people that I try not to cross.
In none of my posts have I criticized anyone for the choices they make.
I drove to the grocery store for many years. One day I realized that I really didn’t need to and I stopped doing it. And the sky didn’t fall. I can’t image that I’m the only person in the world who’s done things a certain way through sheer force of habit and because “that’s the way everyone does it”.
I’m just trying to share the idea that many people have options and every once in a while it’s useful to stop and have a look at what you’re doing to see if maybe there’s another way to do it – one that would make more sense in personal terms and/or in terms of the bigger picture.
I’m planning on voting yes, but this analysis has me laughing too.
I can run my own analysis. If there’s no parking at all, there’d probably be a drop in customers. Maybe so much so the the store wouldn’t be profitable and would have to shut down and lay off all its staff.
Oh wait, why does the store stock diapers? I dont buy them. If they’re a loss leader, then I’m subsidizing the store. I wonder how much I’m paying for the diapers. Oh wait, why is there a bike rack outside? I dont use that either.
My point is, private stores will do the math and figure out the intersection of supply and demand, providing services and prices which they hope will maximize their own profits. If a competitor thought they could operate a store without parking and then pass that savings on to customers, they would do it.
If all stores were required to stock diapers, maybe 5000 for every 20m^2 of floor space, then your comparison would work. But I am guessing that you would agree that such a diaper requirement would amount to a hidden tax. As a rule of thumb, in Metro Van 1 off-street parking space is required for every 20m^2 of grocery store floor space. So even if a competitor thought he could operate a store with less parking, they won’t be able to do it in Metro Van.
For some bizarre reading check the Vancouver off-street parking requirements: http://former.vancouver.ca/commsvcs/BYLAWS/parking/Sec04.pdf
I guess there’s a minimun requirement because neighbourhood groups would get upset if people were parking all over the place?
Anyway, why doesn’t the store just charge for parking?
The neighborhood parking is far too cheap. No parking should be for free, anywhere in Vancouver. See Plan B for funding (posted elsewhere). If we want less cars, we have to charge more for its two states: parking and driving. The province by and large regulates the driving part, but the cities should increase parking fees drastically, BEFORE they ask for more money for transit. A major policy error.
“My point is, private stores will do the math and figure out the intersection of supply and demand, providing services and prices which they hope will maximize their own profits. If a competitor thought they could operate a store without parking and then pass that savings on to customers, they would do it.”
That is how it should work – not how it does work. Below are some excerpts from the Surrey zoning bylaw, which regulates the amount of parking required much like almost every other Canadian / US city.
SURREY ZONING BY-LAW 12000
Part 5 – Off-Street Parking and Loading/Unloading
1. Applicability:
The Off-Street Parking and Loading/Unloading regulations apply when there is:
(a) A proposed building or structure;
(b) A building or structure being erected, enlarged or increased in capacity; or
(c) A proposed change in use.
….
3. Compliance with Parking Requirements:
The owner or operator shall be responsible for the provision of the required
parking spaces.
….
C. Required Off-Street Parking Spaces
1. The minimum number of off-street parking spaces required for land uses
permitted under this By-law shall be provided in accordance with Tables C.1 to
C.6.
Here is a video I made you might find interesting:
Great video, Matt. Surrey is definitely a suburban nightmare rather than an urban dream. I think they’ll update their bylaws soon. They’re already allowing micro-condos. As more people move there, they’ll have to address density. It’s just the slow moving speed of bureaucracy.
Thanks for the feedback Kirk.
I originally presented this Surrey’s transportation staff so that is why they ended up getting picked on. But don’t think for a second that having these regulations is unusual, and if you took a broad sample of Canadian and US cities I don’t believe they would be unusually high requirements either.
The Surrey staff I have met are great and are working hard to fix the mistakes they have inherited. I know they are working on their parking bylaws so I am hoping something good comes out of the process. The point I wanted to make to them is that something like Commercial Drive can’t ever develop where there are off-street parking regulations. Even if they just lower them it still doesn’t resolve the issue of freezing things in a certain pattern.
To do the calculation from a different angle, providing an off-street parking space takes about 25m^2 of space, including access ramps/lanes. Commercial real estate costs around $5000 per square meter in Vancouver, so that’s $125,000 per surface parking stall. Underground is cheaper at around $40,000 per stall, but that does not work for existing older buildings. Take a commercial tax rate of about 1.5%, that makes about $2000 property taxes per surface parking spot, or around $600 per underground spot. Now add in the annual opportunity cost of $4,500 for buying/renting the commercial property for the surface lot or $1,800 for building underground parking you get to a total between $6500 and $2400 per parking spot per year.
Keep those numbers in mind when you look at Matt’s examples. That restaurant with 10 spots needs to generate $6.5m in revenues to make sure that the cost of providing parking is less than 1%. Well, maybe a little less since commercial property is worth less than $5000 in that area, but you get the idea.
If the store has no or a much smaller parking lot it is in a denser neighborhood or very close to transit, with far higher rents. SO YOU PAY EITHER WAY.
Supply and demand. When density is scarce it costs more. When transit is scarce, so is density, inflating its price. Why does density cost more? Because people value it. Either way, you pay, and either way you get something for your money. With parking, you get… parking. With density, you get more vibrant city life and a different kind of community.
The cost of parking is hidden, and externalized on actors who do not consume it. The result is an oversupply of parking, an undersupply of transit and inflated prices for density. I find it odd that I, a free market sceptic, am making this argument to you of all people.
Of course, as I wrote the original article I disagree with those who say it is laughable. On an individual level, there isn’t a bloody thing we can do about this parking pseudo-tax. Of course the idea of a store without parking spaces is ridiculous: because they are an organic part of the transportation system. We need spaces because we drive: but we drive because there are spaces. (The VTPI link explains that parking requirements in Oakland decreased density by 23%. An obvious consequence of which is car trips substituting for some walking trips, increasing the demand for parking and… here we are.) Reducing parking must go hand-in-hand with providing transportation choice and building walkable neighborhoods.
This comes right back to the real issue in this plebiscite: what kind of city do we want to live in? Individually, we are locked into the urban form that exists today, and the logics that flow from that. Only by working together can transform the city. That entails building consensus, making compromises, developing arguments, uncovering differences: in other words, doing politics. Democracy is not waiting for the province to solve our problems. It is making the commitments and sacrifices ourselves. It is making ourselves citizens as we make our city.
I don’t understand why people find this risible. I especially don’t understand why some people would find it useful to point and laugh, without providing any constructive commentary. Seems like junior high school to me…. but anyway.
Parking regulations impose an artificial floor on the amount of parking, which cost gets passed on to consumers. Geof has calculated the cost of parking to be about 1%. (The exact figure is not as important as the order of magnitude.)
The argument (as I understand it) is that if you’re going to get upset about a 0.5% tax, you should be at least equally upset about the minimum parking requirements.
The point is it’s irrelevant. The transit plan will not effect the number of parking stalls, so it’s dishonest reasoning to mention it at all.
The public has limited time to hear our arguments. We shouldn’t make as many arguments as possible, no matter how silly. We should make a few, highly convincing arguments.
The public is pretty clever, and they have a strong sense of smell for BS. Let’s hope the arguments that stick in their heads on voting day are not the fallacious ones. Or the condescending, ideological ones like “vote this tax on yourself because you are a fat, ignorant suburbanite who needs to be bribed with your own money to take the bus”.
We have to make an argument that “this small tax will allow you to have a better life that you actually want”.
I agree with you about overall messaging, and probably this would not be a message to lead with.
I don’t agree that this argument smells of BS, nor do I agree that it’s condescending, nor that it’s dishonest reasoning. Nobody ever claimed that the referendum would affect the number of parking stalls; the argument only tries to put the size of the sales tax into perspective by comparing it to something we already pay for.
It is ideological, but then that’s what the whole discussion is about: what does Metro Vancouver value?
You’re reasonable Agustin. Honestly, I think it is an good argument on its own. It’s a rough guesstimate, but that’s fine. Parking requirements are perhaps some of the most perverse, costly, arbitrarily redistributive laws we have.
I agree entirely about messaging. If you read my original article, it does not even mention the proposed congestion tax.
I think this argument is useful only in narrow circumstances. In particular, I think it may be appropriate as a *response* when someone claims that drivers pay their own way, or that they don’t use transit and don’t see why they should subsidize it. I think these people are unlikely to vote for the tax under any circumstances. The aim would then be to arouse a sense of fairness among potentially sympathetic observers.
You say, “The transit plan will not effect the number of parking stalls.” I did not say this. It never crossed my mind! Of course that isn’t true. Even if it were, I would not voluntarily alienate drivers. The point I make in my original article: “I am not blaming drivers for driving. But some drivers assert angrily that they are already paying the full costs of the infrastructure they use and don’t want to contribute to infrastructure they don’t. They are wrong.”
Your feedback is valuable. What the writer writes is not always what the reader reads. I want to avoid misinterpretations. I suspect reader comments are an ideal place to test arguments out. I stand by my argument, but having seen the reactions here, I would think very carefully before using it.
You know Geof – I must apologize. I fired off my vitriol cannons a bit hastily, and upon sober second look, your argument makes a lot of sense.
It is interesting having an estimate of the cost of parking requirements on total costs. And it’s darn high! And I see nothing wrong with the calculations if you look at it as an “expected value” or average across many developments.
I misinterpreted the argument as that the transit referendum would reduce parking costs, when you never made that point.
Let this be a lesson to ME – read more carefully before bravely sending my keyboard into battle!
Home Depot on Cambie offers drivers $3 off their purchase if they park in the pay parking area under the store. If you arrive by bus or Canada Line or bicycle, or on foot, not only will they will not compensate you, but they will yell at you if you dare ask. So…by my calculations… the parking subsidy for this business is $3 per driver per visit.
What I find so frustrating about analysis like this is hard to capture in a brief commentary. But the essence is this: in evaluating who is subsidizing whom, to the tune of what, it is not one transport modality that subsidizes another, but rather, that big shopping trips subsidize small shopping trips – and that these trips may be made by the same people. And for big shopping trips to occur, people have to drive (or take a taxi, doubling driving distance per trip).
Geof, you say you drive (and I should say here I didn’t realize that this post wasn’t written by Price, from whom I expect more insight given that I have subsidized his salary most of my adult life, and his). If you drive, as well as walk, cycle, push a stroller, or take the bus, then you know the relative carrying capacity that each of these modalities allows you. And if you do all of these things, then you also realize that by paying a tax to provide parking, it is not someone else paying to allow you to park, but you paying for the variety of infrastructure that allows you to shop at different times in each of these ways.
As it happens, the excellent video that Matt made analyzes the block where I have done the bulk of my grocery shopping for years, and Commercial Drive has been my closest business area for over 20 years. I have probably spent upwards of $10,000 per year on Commercial Drive during that time. If we remove all the expenditures I made by car, because local cyclists didn’t want to subsidize parking, with that amount x all the car trips removed from the Commercial Drive economy, there would be fewer stores there. So who subsidizes who? People driving could shop somewhere less ped/bike friendly, but choose to support that urban design model. As in race and religion, segregation and exclusion do not beget a pretty picture.
I appreciate the full force of Matt’s argument in the video, and I am not advocating for parking allowances like those in Surrey. But the allowances of Commercial Drive do not constitute a subsidy for cars. They, and even reasonable sized lots like the Commercial Drive Safeway, constitute mixed-use infrastructure expenditures that serve the common good, ie, a vibrant main street. Ask a Commercial Drive merchant sometime how their sales on car-free day compare with any other day of the year. Or compare income on the side of the street when rush hour parking rules are/are not in effect.
It is actually pretty funny to read the post that landed in my inbox while I was drafting this, that asked “where are all the women in urban design discussion?” Where are we? Right in front of you (and likely serving you dinner). As you self-righteously glide by on foot or by bicycle, I’m the mom/family caretaker loading 4 bags of heavy groceries into my car outside the store where you expect to be presented with a fine selection of fresh food to choose from. The one you think you are subsidizing by paying 85 cents so I can park my car. The only reason the merchant can present that amount of food that fresh is that the larger shopper creates enough inventory turnover to buy all that and keep it all fresh.
What’s frustrating about being this woman is that no one ever pays for our opinions. Whether they are men or women themselves, they’re too busy in their fine offices, making decisions designed to control how we accomplish tasks that they have no idea even need to be done. And on the rare occasion when we speak up or a position that reflects our common experience is advanced publicly, they ridicule our experiences and our stated needs, to the point of making jokes about lining cat boxes with them.
That is where the women are – below the cats. Except unlike the cats, we are also paying the people who put us down.
Author
Original post written by “one whole minute” – here: http://gglass.webfactional.com/blog/2015/01/26/the-invisible-sales-tax-for-parking
I don’t think it is fair to say that the parking spaces at a store are a subsidy to drivers. I do think it is fair to say that the parking spaces they are required to provide over and above what they would choose to provide if the decision were up to them are a subsidy to drivers. But that would be much trickier to calculate, if at all possible.
Karin,
You’ve conflated a lot of issues in your comment – too many to really respond to – but I feel compelled to say one thing.
Scroll up and read your original comment on this blog post, and consider whether it was conducive to constructive discussion. Now compare it to your accusations about how other people treat you as a woman (in particular your line about how other people ridicule you and make jokes).
There is a strong social justice component to advocating for public transit and active transportation. This advocacy is not misogynist; in fact, for many of us, it’s exactly the opposite. Please be careful about where you cast your aspersions.
Agustin, not a bad point. I did say in my long comment that I thought the post was written by Price, from whom it would have been one in an interminable series of remarks and posts that denigrate, ignore, and generally treat with contempt the population segment I represent – and on my dime at that, to add injury to insult.
Your point about social justice is a dangerous line of thought as a way to discourage my voice; it is totalitarian and elite at heart because it presumes to know what social justice is for people who may or may not agree with you about their own lives. I’ve watched this term and movement from its birth and see it exercise its muscle in the education realm where it is ruthlessly intolerant and inexcusably exploitative of the needy and vulnerable. Your intentions may be different, but the intended outcomes of the movement as a whole are not just, so I certainly do not cede it moral high ground.
Advocating for public transit and active transportation could be done in so many more positive ways, but every time there is a choice, tribalism and exclusion are chosen. Questions like the one you posed above – what does metro Vancouver value – are answered every day by Vancouverites in the choices they make and the things they say, but for advocates there is a foregone right answer and they can’t hear humanity there; just wrong answers that they have to change and “educate.”
So, am I angry; do I cast aspersions? Yup, I do. But so does the author of this blog, every day about ten times into my inbox. It is an example of how social justice discriminates, that advocates are allowed to be angry, but ordinary people who (gasp!) drive are not. My mistake was venting in a similarly unrestrained fashion at the wrong person, and I’m going to respond to Geof below.
But do I take your point? Yes, and thank you for making it 🙂
Glad to have a discussion with you, Karin.
In my family, I do most of the shopping for groceries etc., and driving my son around. I do the majority of my shopping at Costco (a multi-generational family of 5 eats a lot). I drive. For other things we can walk as a family to the local mall (Brentwood; it’s a real shame Kin’s Market closed).
Growing up in Ottawa, I remember being sent by my mother to walk or bike to the supermarket to pick things up for her.
I have also lived in Switzerland for two years. I can probably count on my fingers the number of times I was in a car. Where I lived, near the city center, many retailers there don’t have any parking at all. For me, and I am sure for many others, groceries were something to be bought each day during lunch or on the way home from work. Fridges were small and produce did not last, so frequent shopping was essential. But it was convenient, well distributed throughout the city. My main supermarket there was probably smaller than my house here. Near it was a row of street vendors who opened every day to sell produce. That city of 70,000 had more life in it than anywhere I have lived in Canada.
If you don’t want to call it a subsidy, call it a transfer to those who drive from those who do not. That applies to all parking spaces, not only those mandated by government.
My claim is descriptive, not normative. In my original article I say only that we should decide what kind of city we want and how to make it happen. I do not condemn socialized parking; after all, I support socialized transit. Yes, I think we should reduce parking minimums. Yes, I think we should build walkable neighborhoods where less parking is needed. I did not say these things because they are distractions from my point, which is simply to uncover the choices we have made so that we can imagine alternatives.
Geof, I don’t know if you do your analysis on the public purse or on your own time (as I do, just for the record), and if it is the latter, had I realized it was not Price posting I would not have made the initial comment that I did. The topic of who pays for what infrastructure should be a frequent topic of broad conversation; indeed it is the last topic on this blog that drew my participation (the installation of bike counters).
That said, I think your blog post began without clear parameters, either within the topic of parking or within the topic of taxation for infrastructure (after all, transit advocacy says increased mobility is a public good). It simply zeroed in on one type of cost, made assumptions about comparative value, and failed to provide a comparative framework. I think Matt’s post made clear – and his recent addition confirms, I think – that the analysis is very different depending on whether we are looking at a condition of ample or constrained supply, and that is the sort of thing that could have been specified at the outset.
But we can’t always choose how conversations start. Personally, I think it’s important to have them no matter where they start; and I’m relieved to find more common understanding of grocery shopping than your original post indicated. It’s my hope that if you carry on the analysis of who subsidizes who in what way, you’ll factor in what everyone brings to the table, whether its their time, their money, or simply their presence to the vibrant city street.