Parking to get more expensive as congestion levy rises 79 per cent
The hike increases category-1 fees from $1750 next year to $3003 in 2026, per car park. Category-2 fees will rise from next year’s $1240 fee to $2150 in 2026. The increases will bring Melbourne in line with Sydney’s equivalent tax, which is currently 69 per cent higher. The 2024 fees for category 1 and 2 amounted to $1690 and $1200, respectively.
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Category-1 areas include Melbourne CBD, Southbank, Domain, Docklands and East Melbourne. The category-2 zone covers Melbourne inner suburbs and will be expanded to include inner-eastern suburbs, including South Yarra, Richmond and Burnley, as well as parts of Windsor and Prahran. It is the first expansion since 2013.
“The announced increases of 79 per cent for both category-1 and category-2 areas will force business to recover a minimum of $13 plus GST per day, per parking space, based on 250 business days annually. This is a substantial burden on businesses, workers, and visitors,” Evans said.
Using the same calculation, the cost for category-1 businesses to recoup the $1690 tax fee in 2024 would be about $7 plus GST, per day, per parking space.
Responding to Evans’ letter, a government spokesperson said congestion was tipped to cost the Victorian economy more than $10 billion by 2030.
“In order to get more cars off our roads, reduce congestion and reduce emissions, we’re harmonising our congestion levy with Sydney, bringing it up to a more appropriate level,” the spokesperson said.
Evans said the rise also contradicted the Allan government’s recent economic growth statement, which spruiked the headline “Victoria is open for business” and aimed to boost the private sector and encourage investment in Victoria.
“Off-street parking contributes minimally to congestion compared to through-traffic, commercial deliveries and on-street parking. Ironically, on-street parking bays, which are more affordable and convenient for parkers, are exempt from the levy. This exemption encourages drivers to circle city blocks in search of available on-street spaces, worsening congestion.”
The Allan government has doubled the fire services levy, increased probate fees, and increased land taxes, as the state tries to return to its first operating surplus since before the pandemic.
The most recent budget update forecast Victoria’s net debt would hit $155.2 billion this financial year and $187.3 billion by June 2028.
However, the update reported the budget is still on track to record an operating surplus in 2025-26, and is forecasting a $100 million improvement, with a surplus of $1.6 billion.
When the levy increase was announced this month, then-treasurer Tim Pallas denied it was designed to protect the budget surplus, pointing to a need to reduce car dependence while making congestion charges fairer.
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