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Are Parking Meters a Tax on Small Businesses?

by Mark Hay

August 18, 2015
Image by Pixabay user Unsplash

Back in June, a bunch of drunk youths shambling around Cardigan, a Welsh town of about 4,000 people, decided to try to get more beer money by breaking into the city’s four pay-and-display metered parking machines. At first this act of vandalism seemed like a real headache. The bill to fix the meters came in at around $35,000, a fee the local city council had so much trouble sourcing they had to leave the meters broken, and subsequently downtown parking free, for weeks. But as the days dragged on, shoppers and local business owners started feeling glad that the meters had been destroyed. It seems the convenience of free parking and the liberty to stroll from shop to shop without worrying about feeding the meter had increased main street storefront revenues by an average of about 30 percent and by as much as 50 percent. The boost evened the playing field between local vendors and megastores with free lots outside of town.

“We’ve long campaigned for free parking,” Keith Davies, a 64-year-old butcher who’s run a shop in Cardigan since 1978, told the city council. Davies, along with other local businesspeople, is angling to use the evidence from this accidental experiment to eliminate metered parking downtown. “While we don’t condone the damage to the machines, the difference it’s made is unbelievable.” 

Locals hoped the meters might stay down until September, giving them time to make a solid case for free parking. But by July 20 the council had restored the regular order of things, eager to reinstitute metered parking as a means of revenue generation and a deterrent to congestion on tiny downtown roads. Even though Cardigan failed to institutionalize its lemons-into-lemonade experience, the story has sparked a wider conversation throughout the United Kingdom about the merits of eliminating metered parking on main streets.

Over the past couple of months, journalists (including one columnist in the nationally distributed Independent) have started talking about parking meters as a tax on local businesses, one paid indirectly by customers just for the right to spend their money. Even prominent members of the sitting conservative government seem to be getting behind free parking as a means of reversing the decline in main street shops, 20,000 of which have closed in the last few years alone. Member of Parliament Marcus Jones, who this May became Undersecretary of State for Communities and Local Government, has even publicly suggested that small towns could use meter-free status as an effective means to save local shops. 

Despite all the support the Cardigan case has rallied around meter-free towns, there are many intellectuals, city planners, and local officials for whom the concept of free parking is anathema. Inspired by the works of the University of California Los Angeles’s Professor Donald Shoup, the world’s premiere parking economist and author of The High Cost of Free Parking, self-styled “Shoupistas” see the potential for unintended harm in such proposals.

Shoup and his supporters have complied hundreds upon hundreds of pages of arguments against free parking, which you can spend hours digesting. (And you should—it will change the way you look at Walmart parking lots forever.) But basically the argument runs that free parking is not really free; it’s a subsidy for car owners. Ordinances that require free parking encourage pedestrian-unfriendly urban planning while taking pressure of citizens to walk or use public transit. Anti-free parking advocates claim that this ultimately increases traffic congestion and emissions, translating into hidden costs that impact everything from the price of goods to local taxes and building costs.

Video from YouTube user Paul Manorbier

All of these are valid points, especially in the United States where up to a third of the land in an urban area can be given over to parking spaces, free parking is still the (often mandated) norm, and urban sprawl is basically running off the rails. But while it’s unclear what Shoup himself would say about the situation in Wales, it seems like many of the anti-free parking arguments are more geared toward larger municipalities, and might not be quite as apt for small towns like Cardigan. A tightly clustered town in a rural community where cars are already a necessity, most business comes from tourists (who often can’t utilize cheap and regular public transit). And in Wales, sprawl and free parking mandates aren’t nearly as concerning as elsewhere—in cases like this, it’s hard to see free parking doing much harm. Actually, by drawing people back to the town rather than encouraging them to hopscotch to extra-urban megastores, free parking in Cardigan might decrease car reliance and emissions, all while giving a boost to local businesses and allowing shops to stay clustered and pedestrian friendly.

Even if Cardigan and other small towns don’t fit the profile of a free parking abuse danger zone, there are still a lot of reasons people might want to see metered parking kept in place. Local councils want and need the revenue these machines bring in (and can’t be sure that store taxes will yield equal revenues). Towns also rely on metered parking as security against congestion, and a safeguard against cars loitering in spots that should have some degree of turnover. Plus Cardigan is one isolated case; we can’t be sure that all other cities would see a similar uncomplicated boost.

But in addition to anecdotal evidence from Cardigan, there’s actually at least one major report from 2013, conducted by the Association of Town and City Management and the British Parking Association, that suggests many small UK towns are regularly over-charging for often-too-short-term parking. Either out of knee-jerk anti-free parking sentiment or opportunistic leaching on an easy revenue source, Cardigan charged the equivalent of about $1.85 per hour for parking with a maximum spot stay of three hours—a lot by small town standards. This overpricing certainly runs its own risk of driving people away from urban centers and towards the free parking in sprawled out megastores.

There’s probably a happy medium for cities like Cardigan, somewhere in between their brief free parking holiday and the reality of overpriced, business-unfriendly meters. Ideally, the British government could crack down on free parking at box stores to equalize the playing field between local shops and megastores. (That will probably never happen, but a guy can dream.) Meanwhile, towns could lower parking fees and increase stay limits to the right inflection point, maximizing meter revenues, turnover, anti-congestion gains, and traffic to local stores. Cities could then inform residents exactly what the money generated from meters was being used for (ideally local improvement projects, or even road and traffic optimization endeavors), decreasing the sense of off-putting abuse and taxation they breed.

Unfortunately finding that kind of compromise is a tall order. Some projects like San Francisco’s SF Park, which uses an app to predict spot openings and dynamically alters pricing based on supply and demand, can help to at least establish fair prices and decrease congestion (although they can’t do much about the pull of free parking options or the perceived fairness of parking fees). But these digital solutions are still in their infancy. It’d be hard to import and implement them right away in small urban centers like Cardigan.

At the very least, though, Cardigan’s recent experience (along with mounting bodies of evidence from other British towns) has started serious conversations about forcing reticent local councils to experiment with decreasing hourly fees and increasing stays. Hopefully these small towns can attain the gains Cardigan felt during the brief vandal-born parking anarchy, all without losing major revenue or running the urban planning risks of free parking.

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Are Parking Meters a Tax on Small Businesses?