Parking meters still charge full VAT rate

Dec 17 2008 by Adrian Pearson, The Journal

NORTH councils are set to pocket thousands of pounds a month for not passing on a VAT cut in parking charges.

Parking chiefs say there is too much work involved in reprogramming the region’s several hundred parking machines to take account of the 2.5% cut in VAT announced last month.

And council bosses are also worried they will jeopardise an ongoing legal battle with the Government if they pass on the rate cut straight away.

Many of the North’s councils have passed on the cuts in swimming and service costs, but none contacted by The Journal have decided to cut parking charges.

At a low estimate, 25 North councils could make £12,500 a month, based on the £500 a month North Tyneside is pocketing by not passing on the cuts.

But busier shopping and tourist destinations, such as Newcastle and Durham city centre, will make many thousands more by leaving parking rates as they are.

Last night parking campaigner Neil Herron said councils had missed a great chance to really help local businesses.

He added: “This reduction would only have been a little change, but one that would have helped at a time when shoppers are heading into town centres to get Christmas shopping done.

“It may well be too late to help now, but why don’t our councils, in the sales, take the lead and offer free parking?

“They would feel a benefit from a vibrant town centre and businesses and shoppers would also benefit.”

And Newcastle Labour opposition leader Nick Forbes also said city authorities had a duty to pass on the benefits.

He said: “The Liberals here have already hiked up city-centre parking charges and at the time we warned them that risked making the city centre less attractive to people driving in who have an option of either Newcastle or the MetroCentre.

“So not only have they increased charges now, but they have so obviously refused to pass on the VAT cuts designed to do something to help people through a difficult time.

“They have shown they do not understand the economic argument and do not see the need to help hard-hit families.”

Newcastle city treasurer Paul Woods defended the council’s decision, saying: “We’ve already reduced VAT rates on council services where we can.

“However, there are services we deliver where we cannot simply cut prices at short notice. For example, we have to go through a legal process to change parking charges and meters.”

But in Durham the council’s legal experts have warned they risk making it impossible to pass on an even bigger VAT cut if they act now.

They claim to be watching a legal battle between authorities on the Isle of White and HM Revenue and Customs over whether any VAT at all should be paid on parking meters.

Director of finance at Durham City Paul Darby thinks it is unlikely HMRC will lose the case. However, if it did, huge refunds on all 17.5% of parking VAT would follow.

But until he knows for sure, he has advised councillors to refuse to pass on the VAT cut as it may impact on the chances of winning back cash.

And a spokesman for North Tyneside Council said: “The amount we estimate that will be overcharged on off-street car parking during this period will be around £500 per month.

“We are committed to ensuring that the community will benefit from the reductions, so we will be considering how we can give the overpaid parking back – perhaps through a period of free parking.”