It was reported this week that the Minister for the Environment, Noel Dempsey, is pressing the Government to introduce green taxation measures, including the taxation of private non-residential parking spaces. That measure is included in the "Short Term Action Plan" of the Dublin Transport Office, launched on September 29th.
The DTO was a little coy about the proposal. To control parking, it listed as one action, "Commence the development of fiscal measures aimed at reducing the level of private non-residential parking in the city centre by 5 per cent per annum".
If the value of a private parking space is about £1,500 per annum (prices of £2,000 have been mentioned), the cost of a benefit in kind to the 24 per cent taxpayer would be £360 each year and, to the 46 per cent taxpayer, £690. This could seriously offset any other tax benefits in the Budget for a person with a "free" car parking space. But which brave soul is going to complain?
Private car parking benefits a minority of commuters. The DTO estimates that next year there will be 39,000 person-trips daily by car into Dublin city centre between 8 a.m. and 9 a.m. This compares to 19,000 by bus and 14,000 by rail.
Here, I confess to being a possible subject of the BIK, but not one of the 39,000. By way of redemption in the green eyes of non-car space owners, most days I park a bike in the space allocated to me. Thus, it is wasted, except when shared with a car. If the BIK comes in, the bike goes out. A dry saddle on a rainy day is not worth hundreds of pounds.
As policy, the BIK is not as straightforward as it seems - a proposal incapable of being objected to by lobby groups and political opponents, a symbolic gesture towards green taxes and managing the traffic crisis. How will it work? What are the likely effects? How much revenue will it raise? What objective will it achieve? Who will oppose it? Who will benefit?
The benefit-in-kind could hardly be applied only to Dublin city centre private car-parking spaces. That would be unfair, and would provide a real rallying cry for opponents. Why should Dublin be penalised over Cork, Limerick and Galway? The Dublin Chamber of Commerce could cry in indignation.
Similarly, it would have to apply across the board. Public servants, for whom there are many parking spaces, could not be exempted. Next question: would Ministers' car-parking spaces, let alone their cars and drivers, be treated as benefits-in-kind? Rural TDs will not welcome a BIK on Leinster House parking, but which one has the soundbite to answer the Liveline caller if they are exempted?
If first-come, first-served private parking lots are excluded, there will be no reduction in car numbers. If they are included, people would pay a BIK on a space they may not find if they are late. Long distance commuters who have to drop their children to school or creches on their way to work will be aggrieved, as well as the business brass.
It is hard to estimate the revenue potential. The estimated 26,000 spaces in Dublin at an average of £600 tax each would give £15.6 million revenue. As a green tax, it should be earmarked for transport improvements, such as new buses or cycles lanes. It would still be a drop in the ocean, but only if it is earmarked will it be possible to identify specific gains from the BIK.
If the BIK is introduced, will people choose to pay it or will a significant number forego their spaces? If everyone chose to pay it, then the stated objective of reducing private car parking by 5 per annum (equalling 28 per cent after five years) would be completely missed. Logically, for the objective to be achieved, 28 per cent of present parking spaces would have to lie unused by cars by the end of 2003. It is more likely that the market will simply clear - the higher cost will find takers, the number of parked cars will not fall, and tax revenue will increase. The cost to the drivers could also be passed to the employer in higher wage demands, which would eventually be passed to the customer. That competitiveness argument always crops up, awkwardly.
There will be opponents of the proposal. The only question is how vocal they will be. It will not be defeated on the airwaves. It may be defeated by economic argument, perhaps by private lobbying. A public outcry is unlikely, however, provided the tax raised goes directly to tangible transport improvements.
Oliver O'Connor is an investment funds specialist.
