Last month, the Victorian government announced plans to expand the reach of the congestion levy imposed on Melbourne parking spaces. Introduced in 2006, the current levy is restricted to the CBD area, but commencing 2015, the tax will be extended in all directions encompassing most of the City of Melbourne municipality. The new “Category 2” areas will be levied at a “concessional” $950 per space, while the levy on the current Category 1 spaces has just increased on January 1st from $960 to $1,300 per space.
Along with the expansion of area, there are also several changes to the existing scheme. Short stay spaces will no longer be exempt from the levy as of January 1, 2014, and further restrictions will apply to the classification of exempt spaces commencing in 2015.
The expanded levy is unwelcome news for Melbourne businesses, property owners and parkers, who already struggle with some of the country’s highest parking fees. Parking Australia’s CEO Lorraine Duffy issued a media release following the announcement challenging the fairness of the tax which the Victorian government says is intended to “reduce traffic congestion in suburbs surrounding the CBD and encourage greater use of public transport in these areas.” “Parking Australia does not support this means of revenue raising which will impact a whole range of industries and have a negative impact on business competitiveness and economic development. It will push up the cost of parking and motivate consumers to shop elsewhere”, Duffy warned.
The proposed expansion areas of the Government Congestion Levy presently provide unrestricted on-street parking without charge.
The levy is squarely aimed at off-street parking which will see the close of a large number of car parks in these areas and an increase of approximately $5 per space, per bay in car parks currently charging a $5 per day parking rate (the result of the levy could see the doubling of off-street parking rates).
If the levy is aimed at reducing congestion and to utilise funds collected by the tax towards public transport and better infrastructure, it should be imposed on all on-street and off-street parking spaces. Councils should also be required to develop parking strategies in these areas to deter the types of travel that create congestion, being morning and evening peak vehicle travel.