You’d think that this lesson would have been learned long, long ago… but apparently it hasn’t been. According to the Chicago Sun-Times:
What’s up is that a month ago, when the City of Chicago privatized parking meters, rates were immediately jacked way up, and you now have to feed 28 quarters into the meter to park a car in the Loop for two hours. In exchange for a 75-year lease, the city got $1.2 billion to help plug its budget holes.
OK, it’s a small example, and perhaps not the most illustrative. If you quarduple the price of something that there is a limited supply of (like parking spaces in a busy area), it might take a vast drop in people wanting to buy that something before revenues drop noticably. Hell, revenues might go *up* if the supply is sufficiently short and demand sufficiently high. But it gets better:
But wait. Don’t parking tickets reap six, seven, even eight times more than what meters bring in? If people start refusing to park at meters, how can they get ticketed? And how can the city hope to rake in that revenue?
So if the government causes the price of something (parking) to skyrocket, yet they do not actually directly benefit from the price increase, then the chances of them reaping a revenue benefit are minimal. And if, as the editorialist is suggesting, the greatly increased price is causing peopel to not buy the product, then the secondary system for government revenue (parking tickets) would seem to necessarily decrease.
Additionally, if people decide to not park someplace because the cost of aprkign is too high… those businesses located near the high-priced parking may well see a decline in customers. Which means fewer sales. Which means less sales tax.
The best way to increase government revenues is to spur on the economy, not to try to grab as much as possible as quickly as possible.
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