S this the unfairest motoring tax ever? Levies on owning and driving a car have existed for a century. But parking on private land has traditionally been entirely free.
That’s about to change. Parking taxes at locations where people work and study (plus a few other places besides) have arrived, been approved and, in one area of Britain at least, are about to be publicly unleashed.
Who’s footing the bill? We headed to Nottingham, the first city to adopt the new Workplace Parking Levy (WPL), to find out – and see how the new scheme could drive people out of town.
It has a population of 270,000, plus countless more commuters, and WPL is expected to raise around £80million once it’s up and running in 18 months’ time. With such enormous profits, other British cities are likely to follow suit.
Our first stop was the headquarters of Boots. With around 9,000 staff, it’s one of the city’s biggest employers.
How will the company handle the controversial new tax, which will inevitably cost it and/or its staff millions? As well as the levies, there are administration and management costs to deal with, plus possible fines for infringements. Surprisingly, Boots isn’t keen to talk, or even reveal how hard it expects to be hit. A spokeswoman says: “Approximately 9,000 people come to work at the Beeston site, and not all are Boots staff. I am unable to confirm the number of car parking spaces.”
She won’t reveal who is being lined up to pay Boots’ parking tax bills, and refuses to confirm or deny rumours that such companies are considering pulling out of Nottingham – perhaps even Britain – in protest against the scheme.
So we did some sums. Assuming just over half the 9,000 Boots employees and associates are granted parking places, all of which are taxable at a flat £350 per space per year, the firm will soon owe more than £2million annually.
Recouping this financial hit from workers would be difficult so ultimately, it’s the customer who seems likely to foot the bill by way of higher prices being introduced in Boots stores.
However, the representative reveals: “Boots is not in support of the Workplace Parking Levy initiative. It is a tax on business and not a means of reducing traffic congestion.
“Boots and other businesses in Nottingham have objected to this policy consistently for many years, and do not see it as a viable means of supporting the city’s future transport needs.
“The WPL does not seek to change driver behaviour, as it charges business and does not directly charge the public.” Other companies are less diplomatic – including the city’s branch of Protocol National, the largest further education recruitment firm in Britain.
Boss Peter Daley reveals: “I am going to recommend to our board that, should this Workplace Parking Levy be imposed, we relocate from Nottingham to a city that’s more business friendly.”
Commercial vehicle dealer Keltruck, which has a workforce of 50, echoes those sentiments, warning the local council that the arrival of a parking tax will lead to the departure of his firm. Boss Chris Kelly says: “If this goes ahead, our long-term plan will be to move out.”
Taxing question
The local council has officially defined workplace parking as: “Any parking provided by an organisation for its employees, persons visiting the organisation for business reasons and the organisation’s students and pupils.”
The space could be a proper, marked out bay – or a muddy corner of a building site. Any area deemed to be a parking space, no matter how rough, will be levied at a flat rate.
The authority goes on to suggest its parking tax is a charge on the organisation, not its employees or students.
So companies, educational institutions and other establishments offering free parking for staff and other workers must count up and own up to the precise number of spaces they provide, says the council. More time and money then has to be spent applying to the council for licences to park cars. After that, the serious financial hit begins, as taxes and fees of hundreds of pounds have to be paid annually for each bay.
The Nottingham scheme is scheduled to begin in 2010. For the first year, an ‘initial’ annual charge of £185 will apply. But that’s just for starters.
Nottingham City Council is already on record saying its parking tax will soon double to “around £350”. An annual figure as high as £370 has also been suggested.
And in a (failed) attempt to prove it’s only a small-time tax, a figure of £1.50 a day has been mentioned by Nottingham City Council Leader Jon Collins. That equates to even more than £370 per annum.
Year-on-year parking tax increases are guaranteed, admits the council, as are penalty charge notices for those who don’t pay. And fines will be imposed on those who infringe parking licence conditions.
Admin charges of “around £100 initially” are another profit centre for the council – and it even admits that if a licence application is made part-way through a year, there will be a full annual charge. So people might park for only one month, but be liable for a year’s worth of fees.
Spaces used by some (not all) essential workers will be exempt from the tax and – initially at least – organisations with 10 or fewer spaces are set to be granted an exemption. But that’s where Nottingham City Council’s parking tax generosity ends. If charities and firms that are genuinely struggling to make ends meet apply for discounts, they will be met with the response that they’re “not applicable”.
The local authority is not interested in collecting individual parking taxes from each worker/student, many of whom might argue they don’t have regular bays or spaces. So the companies, colleges and other organisations are expected to cough up instead, whether they have sufficient funds to pay or not!
Another difficulty will arise if these businesses try to claim those funds back from staff and students. There will inevitably be a great deal of administration, plus disputes as firms maintain they shouldn’t be out of pocket, and individuals argue the same. Both sides have a point. “It is a charge on the organisation, not the employee,” insists Nottingham City Council, before adding: “It is entirely up to the organisation whether or not (and if so how) it passes the charge on.”
So the financially challenged owner of a struggling factory that provides, say, 100 spaces for its low-paid workers will be legally obliged initially to fork out on a minimum WPL charge of £18,500 (100 x £185), rising to £35,000 (100 x £350) in the second year. It’s anyone’s guess how high the annual tax will eventually go.
The factory boss has three choices: he could borrow tens of thousands of pounds, adding to the company’s debt. He could borrow the money, paying the council to avoid possible criminal charges, then try to claim the cash back from his workers. Or he could shut down his off-street car park and tell his staff to find their own solution.
Justification
Nottingham City Council tries to justify its parking tax by claiming: “All the money raised would be invested back into funding more and better public transport.” Such an ambitious statement cannot be accurate, because some of this money will have to pay for staff and admin costs. Therefore it cannot and will not “all” go towards more frequent and better public transport. Especially as some of the cash will also be siphoned off for building refurbishment.
Despite the reluctance of companies such as Boots to reveal the exact number of work/study-related parking bays they have in the area, research suggests that nearly 40,000 spaces are eligible for the parking tax.
When the council launches its initial annual charge of £185 per bay, it will raise £7.4million – plus countless extras in fees, fines and associated charges.
When the annual fee per bay rises to £350-£370, as the council has already predicted, its yearly WPL income could be nearer £15million – plus those inevitable and lucrative extras.
Indeed, such an annual income could undoubtedly pay for an awful lot of the city’s public transport improvements and building works. In the process, there’s a real risk that such an initiative could also end up driving motorists out of Nottingham altogether... leaving a lot of empty parking bays in their wake.
Who pays the WPL – and how much will it cost them?
Students and pupils are required to be “licensed” to park, using bays subject to parking taxes at the full rate of £185 in 2010. Nottingham City Council admits the levy is scheduled to double by 2014/15, but has not decided if the fee will rise to £350 or £370 per space per year. Another figure suggested by a council official is £1.50 per day, which equates to an annual fee higher than £370.
The promise is that year-on-year price rises will be ongoing, but will slow down after about 2015. Overall, it’s clear the Nottingham WPL will be an inflation-buster – just as the London Congestion Charge has been.The same licensing laws and levels of taxation apply to: “Parking places for employees, including those organised and paid for by an employer (such as in a public car park)”. This could lead to a situation where a generous employer pays for workers to leave their vehicles in a pay-and-display car park and will then be ordered to pay the WPL on top. Alternatively, the employer can – and in some cases, will – stop funding the pay-and-display fees and, at the same time, absolve themself of WPL charges, administration time and costs, plus possible fines for infringements.
Parking bays for suppliers, agents and “other business visitors who are attending their regular place of work” are also subject to the licensing laws, plus the full rate WPL.
Police, fire services and “qualifying” NHS premises such as hospitals and GP practices must also apply for licences to park, although they will qualify for 100 per cent discounts. So while nurses working shifts at NHS hospitals will be exempt, for example, their counterparts at private hospitals and nursing homes will not qualify for exemption. Parking facilities used by countless other essential workers will not be exempt, either.
Companies, places of learning and other organisations which have 10 or fewer bays will be required to make licence applications, but the spaces will be exempt from the tax. However, if there are 11 bays or more, all 11 are liable for the charge. Should an employer ‘lose’ one of his 11 spaces, though, the employees will save a small fortune due to the tax-exempt status for businesses with up to 10 parking places.