Parking tax at 50%? That's a lot like sinful, experts say
The plan might backfire, the parking authorities and others say.
PITTSBURGH (AP) -- By raising its parking tax to 50 percent, Pittsburgh may be sending commuters and others an undesirable message -- that it's sinful to park downtown.
In Pennsylvania, only alcohol, which is taxed at 60 percent of its wholesale cost, and cigarettes, which are taxed at 50 percent before sales taxes are added, are taxed at a higher rate than parking in a Pittsburgh lot will be on Feb. 1, when the new law takes effect. The current parking tax rate, 31 percent, is already the highest in the nation.
Robert Strauss, economist at Carnegie Mellon University, said so-called sin taxes on alcohol and tobacco are generally effective because the demand for those products usually doesn't go down even when the price goes up.
"The difference is that people will give up parking before they give up cigarettes and alcohol," said Merrill Stabile, president of Alco Parking, which operates lots in the city's Strip District and North Side.
City Council approved the parking tax increase earlier this month to help offset a projected $42 million budget deficit because it was a readily available income stream and because city officials believe that commuters who work in the city ought to pay more for city services.
But Steve Irwin, chairman of the Pittsburgh Parking Authority, said its customers are roughly half city residents and half suburban commuters. Irwin told the Pittsburgh Post-Gazette for Wednesday's editions that he fears that workers may start to abandon city parking lots.
Strauss said that sin taxes can cause people to change their behaviors if the financial discomfort outweighs their addiction.
"Cigarette taxes really affect young people who are not addicted to smoking," Strauss said. "The adult population keeps buying."
Irwin said that Pittsburgh's parking operators might be blessed, in a way, that people haven't become as accustomed to mass transit as they are in larger cities like New York or Philadelphia.
"We haven't made the investment to switch overnight to a New York model where people are accustomed to living without cars," Irwin said. Unless than happens, many people will likely be content to pay for their parking habit, he said.
Stabile said Alco will try to combat the parking tax by raising its rates only in lots that are very popular. Alco will keep its rates steady in those lots that have many vacancies and try to drum up more business before increasing fees in those lots, he said.
Strauss said the best barometer of whether the higher parking tax causes people to kick their commuting habits will be at year's end.
"In the extreme short run, people will complain but not change their behavior," Strauss said. "But when those annual leases come due, you will find people re-evaluating and making changes."