The Commercial Real Estate Industry Coalition, a consortium of all of the major Toronto real estate associations, issued a report today outlining key disadvantages of a proposed parking levy on commercially-owned parking stalls in the City of Toronto.
According to the Real Property Association of Canada (REALPAC), the parking space levy is a poor financing tool to help the City fund its operating or capital budget gap. A parking levy is a tax applicable to all parking spaces occupied or unoccupied, above or below ground, at a set daily rate. It is levied against the owner of the parking space. It is to be distinguished from a parking sales tax, which is added to the charged cost of parking for a specific parking space actually occupied by a vehicle.
BOMA Toronto, one of the coalition partners, said the charge would essentially flow through to tenants under typical retail, industrial, and office net leases, and impose significant costs to large and small businesses, including small retailers and family businesses. Consumers would also feel these increased costs in the form of higher grocery bills, and higher cost of goods sold in retail stores.
The City’s KPMG report recommended a tax between 50 cents and $1.50 per day, per space on commercial parking spaces, which could generate about $575 million annually for infrastructure and transit. At the highest rate proposed, the parking levy could amount to a de facto 44 per cent commercial property tax increase on Toronto-based businesses. The resulting costs of doing business in the city would make relocating to 905 or elsewhere that much more attractive.
“The retail and office sectors are likely to bear most of the increased cost from a parking levy,” says Michael Brooks, chief executive of REALPAC. “At a time when Toronto’s competitiveness significantly trails other Ontario regions, a parking levy, as it has been proposed, would be another unfair burden on Toronto’s business community—especially real estate. The city needs to become more affordable not less so.”
City Council will make a decision on December 14, 2016, however it is unlikely that it will be implemented in 2017, as initially proposed.