Huge tax hike on pay parking possible
Motorists who use pay parking lots may have to shell out 35 per cent more in combined taxes starting next summer.
It’s a nightmare scenario for some commuters and businesses that would happen if the provincial government decides to stack the Harmonized Sales Tax (HST) on top of an increased parking sales tax for TransLink.
TransLink will jack its existing tax on pay parking lots from seven to 21 per cent on Jan. 1 to raise an extra $30 million a year to help stabilize its finances.
That was expected to last only six months until July, when the TransLink tax was to be replaced by the 12 per cent HST. The province promised it would then make up the shortfall in revenue for TransLink from other sources.
But the province now says it may keep the TransLink parking tax – at 21 per cent – alive after the 12 per cent HST starts to apply.
The move would ensure TransLink gets its cash and Victoria would scoop an extra seven per cent from pay parking it doesn’t now get, worth roughly $15 million.
Finance minister Colin Hansen wasn’t available for comment, but a ministry official confirmed imposing both taxes is an option, adding no decision has yet been made.
“It’s unbelievable,” said Imperial Parking senior vice-president Julian Jones, whose pay parking firm is struggling to implement the higher tax on short notice and sort out the confusion.
“It clearly has not been well thought out.”
The tax hit would claw more money from patients and visitors going to hospitals, car-driving students at colleges and universities, guests at hotels that charge or parking, as well as air travellers who park at YVR.
Downtown Vancouver as well as other pay parking business districts like White Rock’s Marine Drive stand to take a hit if customers are deterred by higher parking costs.
“I’m very surprised,” said White Rock Mayor Catherine Ferguson. “This is something they should have been communicating to us. It’s going to affect every single community in the Metro Vancouver area.”
Eight per cent of White Rock’s budget comes from parking revenue and she said a steep spike in the tax would make it harder to collect the needed civic funds without driving visitors away.
“Obviously it’s going to have an impact,” she said. “It makes it that much onerous to do something simple – go down to the water, use the facilities.”
TransLink vice-president Bob Paddon said the province expressly indicated the TransLink parking tax would be repealed as part of the dismantling of the provincial sales tax and the shift to the HST.
Area mayors voted on that basis when they approved TransLink’s 10-year plan, which authorized the increased parking tax.
“I don’t think the mayors would have found it palatable in those discussions to have that tax go up by 33 per cent,” said Burnaby Mayor Derek Corrigan, who voted against the plan.
“I warned them they shouldn’t go in based on a promise by the provincial government,” he said. “Now they’re going to walk into a meat grinder.”
The province and TransLink had both previously said there was no way to keep collecting the parking tax after the HST takes effect, because B.C.’s bureaucracy to collect the provincial sales tax will vanish.
If the 21 per cent tax continues, ministry staff say they haven’t decided whether the province would keep collecting it or whether TransLink would set up a collection structure and absorb the resulting costs.
Surrey Mayor and Mayors Council chair Dianne Watts said she’s concerned that scenario could erode what revenue TransLink receives.
That’s what happened with TransLink’s now-abandoned parking stall tax, which cost $6 million a year to administer.
“I think we have to be careful in terms of what this looks like and what the cost implications are,” Watts said.
On paper, the two taxes add up to 33 per cent. But because the HST would be charged not just on the base fees but also on the TransLink tax, the compounding effect makes the total tax bite 35.5 percent.
A commuter who rings up $100 a month in parking fees would pay $135.52, compared to $112 both now (five-per-cent GST plus seven-per-cent TransLink tax) and under the HST-alone scenario come July.
December 15, 2009. Jeff Nagel. Surrey North Delta Leader