Parking Taxes as a Second Best Congestion Pricing Mechanism

Growing vehicle use and congestion externalities have led many to consider alternative congestion pricing mechanisms, as road pricing often has high infrastructural costs and faces public opposition. This paper explores the role of parking taxation in reducing congestion by considering a natural experiment created by the progressive January 1, 2012 Chicago parking tax increase. Exploiting differences in vehicle use across income groups, it is estimated that the approximately $2 a day parking tax increase led to a 4-6 percent reduction in total vehicle trips in high-income areas, with the largest response seen on roads more heavily used by commuters. Also found are corresponding increases in use of public transit and a 3. 1 percent aggregate reduction in vehicle trips. It is concluded that parking taxes can help mitigate congestion externalities, although they are no more than about half as effective as more efficient congestion tolls.

Bibliographic Details

Main Author:	Inter-American Development Bank
Other Authors:	Riley Wilson
Format:	Working Papers biblioteca
Language:	English
Published:	Inter-American Development Bank
Subjects:	Taxation, Income, Consumption and Saving, Development Bank, H31 - Household, Q53 - Air Pollution • Water Pollution • Noise • Hazardous Waste • Solid Waste • Recycling, R41 - Transportation: Demand Supply and Congestion • Travel Time • Safety and Accidents • Transportation Noise, R48 - Government Pricing and Policy, R52 - Land Use and Other Regulations, IDB-WP-614;Congestion, Second-best pricing, Traffic, Parking, Parking tax, Parking demand,
Online Access:	https://doi.org/10.18235/0000205 https://publications.iadb.org/en/parking-taxes-second-best-congestion-pricing-mechanism
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