Are Parking Levies Better than (De)congestion Pricing?


Dave Hitchborne

Nottingham is the first city in the UK to introduce a levy (i.e. tax) on all workplace parking to finance public transit.  Stephen Joseph at the UK’s Campaign for Better Transport thinks it’s a better strategy than congestion pricing (or as I have always advocated calling it, decongestion pricing):

Although every city is different, there might be some wider lessons here. One, for the transport economist geeks, might be to stop obsessing with congestion charging. Efficient in economic theory though this might be, Nottingham looked at it and decided that it would be very costly – all those cameras and enforcement – and would not target peak hour traffic jams and single-occupancy car commuting as effectively as the levy would.

The wider lesson from this is that the politics of a levy are different, too. With congestion charging you have to get support from the whole city and potentially its hinterland; and referenda in Manchester and Edinburgh show how difficult that is. With a workplace parking levy, there is a narrower and potentially more politically winnable discussion with businesses and commuters about what a levy could pay for – things that might make journeys to work easier and cut peak hour jams and pollution.

This may indeed be a good strategy at least for smaller cities.

This is not the first parking levy in the world: Sydney, Melbourne, and Perth in Australia all have them in their inner cities, as does Montreal in Canada.    Toronto is debating the issue now, while in the UK, Cambridge is considering following Nottingham’s lead.


23 Responses to Are Parking Levies Better than (De)congestion Pricing?

  1. Mike Robinson September 19, 2016 at 12:39 am #

    I wonder if there has been any analysis of what type of journeys are targeted by a congestion charge compared to a workplace parking charge?

    In London, traffic is on the rise again. largely because of Uber and the race to provide increasingly faster internet delivery services, neither of which would be subject to a workplace parking charge.

    Current implementation of congestion charging in London is very expensive based upon cameras covering the perimeter of the zone. There are plans to expand this into a so-called Ultra Low Emission Zone and the perimeter of this will be even bigger so even more expensive..

    Of course, a workplace parking charge begs the question of residential parking charges. Most of central London has controlled parking so residents do need to pay for a parking permit, but the cost of this is generally only about £80 ($100) a year which cover the cost to administer the schemes. I’ve always though it highly ironic that people who have multi-million pound houses expect to use the land outside their front door to store private property (sometimes called parking…) almost for nothing.

    Of course, workplace parking charges are less politically sensitive than residential parking. Someone in Transport for London described residential parking as being like the third rail on train tracks… touch it and you die…

  2. ararar September 19, 2016 at 10:50 am #

    the canton of Ticino in Switzerland enacted a similar measure too, for all shopping centers and workplaces with more than 50 stalls.

    It passed a referendum (amazingly), but is now blocked a the federal court, pending a sentence, because the businesses depending on single occupancy vehicle wage dumping crossborder commuters ain’t wanting none of it (this also explains why the vote passed despite the region being very automobile-minded).

    Something like a congestion charge would NEVER get passed, but this law did pass.
    Also the infrastructural cost of this law is nil, unlike congestion charging.

    Now the question is how much effective it is except as a way to raise yearly income for public transportation service.

    If the courts give the go ahead, we will see the effects. It appears that employers were dumping it on the workers who want a parking space, so it may actually work.

  3. Pete B September 19, 2016 at 12:36 pm #

    Thanks for following up my email with this post Jarrett. Readers may like to see this footage of the phase 2 tram lines that the workplace parking levy helped to fund. It gives good coverage of the mixture of private right of way and street running in traffic of the new lines:

    Plus the council’s website for the workplace parking levy:

  4. Matthew September 19, 2016 at 3:55 pm #

    Cambridge is considering a combination of parking levy, introducing comprehensive residential street permit parking (to stop commuter parking), and most radically: gates that stop the movement of private cars through certain key arterial roadways at peak times. The idea is to get people to stop driving through the city as much as possible during rush hour, so that buses become very reliable and cycling is safer.

    Cambridge is of course a very unusual UK city in that many more people ride cycles than buses. Many, many more. Especially within the city, where cycling mode share is over 3x stronger than transit. Part of the reason is that buses are unreliable. Some of that is due to traffic congestion. But it also seems to stem in large part from the complete incompetence of the bus companies.

    The UK is obsessed with privatisation, and the private bus companies like Stagecoach are almost completely hopeless at modern bus planning and operations. They run single door buses where everyone pays up front, lots of times with cash. People entering the buses have to push past people exiting the buses. Tickets are generally not honoured across bus operators. Scheduling and planning of routes is completely siloed. Even within the same company, routes cannot cross subsidise: because that might prevent ‘competition’. All parties, including government, seem to spend their time and resources plotting against each other rather than coordinate.

    It’s a sick, sick system.

    Transport for London is an exception in this country, being publicly owned and reasonably competent.

    • Mike Robinson September 20, 2016 at 12:11 am #

      IIRC Cambridge has the highest transport modal share for bicycles of any city in the English-speaking world. It helps that students aren’t allowed to own cars!

    • P September 20, 2016 at 8:40 pm #

      Privatisation is not one thing, it is a spectrum of involvement. The planning in London is public, but the bus operations themselves are private and run to contract.

    • Asher September 25, 2016 at 2:24 am #

      Flixbus is gaining considerable ground, is private, and has a quite extensive network. Stagecoach may just not be that well run – I believe it sold out to Flixbus on the continent.

    • Ian Mitchell October 5, 2016 at 10:07 am #

      Cambridge, like Davis, CA (also high cycling), has an artificially young population due to its university. A typical person in a place with average age of 25 is going to be much more likely to hop on a bike to arrive 5 minutes earlier, this is not true where the average age is 45.

      Generally, vehicles moving through campuses (including buses), have to go slow, often lower average speeds than even causal cycling. Buses on campuses often have loads of stops, making them used to replace walking trips, and slowing them down even further. Then there’s everything you mentioned…

  5. Pete B September 20, 2016 at 10:56 am #

    Thanks Jarrett for following up my email with this post. Here is a link to more information on the workplace parking levy:

  6. J Brant September 20, 2016 at 4:17 pm #

    Which of these do you think are more feasible to pass in an American city?

    • Ian Mitchell October 5, 2016 at 10:10 am #

      Parking, definitely.

      Because so many people can tele-commute some days of the week, and because people who come into the city for reasons other than work tend to bring dollars into the municipal coffers, whereas those who come in to work, tend to take money out of it, to suburbs where they live.

  7. P September 20, 2016 at 8:42 pm #

    Here are some suggestions:

    1. Land value tax on land. This means if you waste land for parking or something else, you pay!

    2. Allow minimum parking to be replaced by total parking. So 100 parking spaces could mean any combination of bicycle, share car and private car spaces.

    • Ian Mitchell October 5, 2016 at 10:11 am #

      LVT is the “least worst” tax, for sure.

      And scuttle minimum parking entirely. I oppose maximum parking as well- let businesses do what they want. It’s the planners, not them, which have always carried the automobile fetish.

  8. Ron September 23, 2016 at 7:02 pm #

    A new employee at my workplace in Los Angeles rides the bus, so HR didn’t put a parking pass on her ID card. This saves the employer money (since they pay rent for each parking pass), but the employee gets nothing for giving up her parking pass. If there were a financial incentive, perhaps more people would give up parking and take the bus.

    • Asher September 25, 2016 at 2:21 am #

      When you include the initial installation cost, London’s congestion pricing spent half of revenue on getting the system up and running. That’s a transaction cost in the hundreds of millions of dollars.

      Between that and the article cited, I’ve come to believe that congestion pricing is often a bad solution. If you can achieve the same effect without the billion dollar transaction costs of congestion pricing, then use those alternatives – like eliminating parking requirements and eliminating the parking tax deduction. Or in Europe, remove inducements to buy company cars, which account for nearly half of new cars.

      Congestion pricing can create bad financial incentives for government. With congestion pricing, governments might not want to hurt demand for travel by car – more demand for travel by car means more congestion revenue. If you’re trying to get people to switch to bikes and buses, don’t hitch your city’s finances to their rivals, else you may not get a pleasant political result.

      Here in Brussels, I’ve heard there are plans to both build a congestion pricing system, AND more parking in the city center – sheer madness.

      Congestion pricing is more sensible with cabs, driverless or manned – require a GPS gizmo in the car instead of building expensive tolling infrastructure. But we’re a long ways away from cabs constituting the bulk of traffic in most places. And the privacy concerns and mass car ownership militate against implementing that with today’s fleet.

      Ron, your coworker may be eligible for cash in return for not using parking, if the parking is leased on a per space basis. Tell her to check into it. Parking cash out.

      • ararar September 25, 2016 at 12:24 pm #

        regarding your penultimate paragraph, AFAIK they’re testing exactly that in Oregon with myorego, even with real vehicles. They came up with a gizmo that plugs in the diagnostics port or something.

        • Mike Robinson September 26, 2016 at 6:56 am #

          London’s implementation of congestion charging was in the early 00s so the technology was expensive back then – fixed camera sites around the boundary of the zone with a data connection needed to each camera site. It is also inflexible as expansion or changes to the boundary means more camera sites.

          If there was an implementation today, I’m not sure if the same technology would be used…maybe some sort of GPS transponder thing (I’m not too up to the tech…) and the car owner would need pay for it, therefore subsidising or covering the cost of the equipment in the car.

          • ararar September 28, 2016 at 2:11 pm #

            in Milan they built the same system as in london (ANPR) but years later, I’m sure ANPR has gotten much cheaper in the meanwhile.

            In Singapore they have a system of gantries that read devices in the car, kinda like the italian highway system but applied to congestion charging. It’s an infrastructure-heavy solution and I’m not sure it’s cheaper than ANPR, especially since every car has to pay 150$ to get the device.

            After 2020 they’re replacing it with a GPS-based system and they’re going to use it for parking too (this is great). It will allow much more fine-tuning of dynamic road and parking pricing for sure. They will be first I guess.

    • el_slapper September 25, 2016 at 4:35 am #


      In France, law ensures you get refunded 50% of your transit expenses. I paid 450 € for my yearly tram pass, and my employer must pay me back half of it. While if I take the car, he’s free to offer me a parking lot…or not.

      That’s a nice incentive. It’s not enough. Most of my colleagues come by car, as my (US-based) employer offers us a free car park(and my place is free most of the year, unless we have visitors and I give them my parking ID). In the same building, another employer does not pay the car park – So most of them take the tramway.

      It also help to have a good tramways system(we just miss a connection to the airport, here in Montpellier – a taxi strike did kill it).

    • Ian Mitchell October 5, 2016 at 10:12 am #

      Not “nothing”.

  9. Mike September 26, 2016 at 3:18 pm #

    Many Canadian cities have had high parking changes in their CBD’s for decades, to encourage people to ride transit to work. This is one of the reasons Calgary has what is said to be the second highest CBD parking rates in North America, after New York City.

    Smaller cities like Charlottetown (population 30,000) are also looking at or have raised parking rates in their CBD. This is coupled with an enhanced park and ride bus network to get people into the CBD.

    American cities would be hard pressed to do anything like raise parking rates high, as their CBDs are not strong enough and planning policies not strong enough to stop decentralization to suburban office parks.

    • Ian Mitchell October 5, 2016 at 10:16 am #

      If you’re going to have everyone have cars and drive everywhere, decentralization works better for that system. Let the suburbs be suburbs, let the cities be cities. Some companies (like twitter) will elect for urban offices to attract the talent pool they want, one that wants to be able to walk or bike to work. Others will locate in the suburbs to be more convenient for their employees, who want to drive everywhere, except in town.

  10. Ian Mitchell October 5, 2016 at 10:02 am #

    Along with this, there needs to be a full-scale public (in this case municipal government) disinvestment from parking. On-street parking where there’s no bus or bike lanes, and perhaps even where sidewalks aren’t broad yet, should be the first to go. Off-street parking should either be banked for development (no parking allowed in the interim) by the city, or sold back to the private sector.

    In my hometown, the brunt of all parking in the most congested areas is owned by, and freely given to, employees of either the city, county, or University. All while they try to feign that they want a “healthy” and “multi-modal” city. The municipality needs to make an example itself.