Will Israel Start Taxing Workplace Parking Spaces?

The idea has been examined over the past decade and raised by the Green Tax Committee as one way to reduce the number of cars coming into Israel’s main urban areas

Israelis wait in a traffic jam caused by a protest on Tel Aviv's Ayalon Highway, February 2019. Israeli roads are the most jam-packed in the developed world, surveys show.
Tomer Appelbaum

When Tel Aviv’s Ayalon Highway is empty of cars the trip from central Herzliya to the Kibbutz Galuyot exit in south Tel Aviv takes 15 minutes. When the traffic is moving at a reasonable pace, the trip is half an hour. But when the highway is clogged, the journey takes no less than one full hour.

This week when a group of motorcyclists chose to drive slowly on the Ayalon to protest police plans to prevent them from driving on the highway’s shoulders, the trip lengthened to an hour and a half and tens of thousands of people were late to work. The police caved in and announced that it wouldn’t enforce the ban “in cases of motorcyclists who drive safely.” The ease with which 100 motorcycle and scooter drivers could snarl up traffic in the Gush Dan area and create insufferable traffic, and the speed with which the Israel Police surrendered to them, pose some interesting questions in light of the government’s plan to limit traffic on the country’s central arteries.

There are several ways to reduce demand, most of which involve employing financial incentives, both carrots and sticks. One way would be to expand the number of fast lanes on the Ayalon with tolls at the entrance to Tel Aviv, a project that is already underway. Another is to raise the cost of parking in Tel Aviv and other high-density areas to discourage coming in by car.

The police’s abortive plan to enforce the rules on those driving two-wheeled vehicles was based on safety considerations and their high accident rate. The fact that motorcyclists chose the Ayalon as the site of their protest demonstrates the extent to which the road has become a narrow lifeline for residents of central Israel.

Anyone who wants to stage an effective protest – the disabled, Israelis of Ethiopian descent and others – know that blocking the highway, in particular near the Azrieli Towers, maximizes your media exposure and calls attention to your cause. Blocking a highway in the periphery will get your cause nowhere.

But the ease with which anyone can disrupt traffic on such a critical artery is very worrying. It’s a place where any fender bender can immediately create massive traffic jams because there are no effecient alternative routes. There was a time when the Ayalon was clogged with cars at specific times during the morning and evening commuting hours, but today, with 851,000 vehicles travelling on it daily, traffic moves at a snail’s pace for most of the day. The Ayalon Highway Company published figures in July showing that the central section of the highway – running from the Seven Stars interchange in Herzliya to the Holon interchange – was travelled by 5.5 million vehicles every week. The lightest travel days are Fridays, when the number of vehicles drops 15% compared with other weekdays, and Shabbat, when a mere 543,000 cars are on the road.

As long as traffic increases, it creates an effective congestion tax by virtue of the extra time it takes you to get where you’re going. But it seems that extra costs are not enough to reduce the number of cars using the road. We need to consider a better way to manage demand on the Ayalon and all of Israel’s highways.

At the finance and transportation ministries they’ve been knocking their heads against the walls for years about a solution. In terms of mass transit, the Tel Aviv Light Railway is already under construction and the Tel Aviv Metro is in planning and awaiting budget approval – but both solutions will take years to have any impact.

The Gush Dan transportation hell will be with us for the foreseeable future, unless we take different kinds of measures.

Reserving lanes on the Ayalon for business and carpooling is a small start, but it won’t do enough to end the traffic snarls. A more aggressive plan is to provide more fast toll roads. It will cost 7 billion shekels ($2 billion) and include 110 kilometers of road, just like the one at the Shappirim interchange near Ben-Gurion International Airport. But that won’t be in place until 2025 at the earliest – a medium-term solution to the Tel Aviv Metro’s long-term one.

But what about the short term – the next five years? One idea that has been making the rounds at the treasury is taxing free parking places at workplaces.

The idea is to relate to parking as a benefit and subject it to tax like any other. The idea has been examined over the past decade and raised by the Green Tax Committee as one way to reduce the number of cars coming into Israel’s main urban areas.

Future Mobility, a nongovernmental organization founded by former treasury budget director Ori Yogev, has been promoting the idea.

It proposes two ways of taxing parking. One is to tax parking costs and the other is to assign a value to an employee’s free parking space and tax them accordingly, much as company cars are taxed. Future Mobility suggested three levels of tax, in a position paper, depending on the density of a city’s population. Rates would vary by city and district.

Future Mobility is confident that the tax would not only deter people from driving to work but net the government 1.6 billion shekels every year.

In a 2008 report, the Bank of Israel went further by recommending not only a tax on parking but providing tax benefits for those who choose not to use their parking spaces at all, based on a program implemented in California in the 1990s that brought a drop of 24% to 31% in demand for parking.

The decline depended on the availability of public transportation but even in areas where it was poor parking demand declined and carpool use grew.

The same study examined the issue of leased cars, which had contributed to a big increase in commutes by private car. The fact that the cars were expensed on a fixed basis regardless of how much they were driven caused employees to use them more and naturally led to traffic jams.

Taxing a parking space is a relatively simple solution because technology like the navigation app Waze, the parking app Pango and others give authorities access to people’s parking data, Politically, it’s another story.

It’s hard to imagine any elected official pushing the idea. It certainly won’t happen before a new government takes office. Maybe events like the motorcycle protest will help ease the public’s natural resistance to being taxed as it recognizes the jam it’s in. As the slogan goes, at a time when Tel Aviv is snarled by construction of a light rail it’s “hard now, easy later.”