The business community’s willingness to advocate for more revenue is a refreshing rebuke to Rob Ford and his hostility to transit fees and taxes.
But just as intriguing is the response of the provincial NDP to the board’s proposals. Andrea Horwath, who has championed transit expansion, said she would not support the proposed revenue tools while corporations and high-income earners continue to benefit from tax loopholes resulting in hundreds of millions of dollars lost to the province.
Her demand that new charges go hand in hand with tax reform is a timely one, since the Liberals need NDP support to pass their budget, and there is much negotiating to be done.
While the NDP’s refusal to uncritically back the board initiative may frustrate many transit activists anxious for a funding solution, Horwath has put principles and good public policy ahead of quick fixes.
Here’s why I think her pressure on the Liberals for a more progressive tax system could mesh well with the Board of Trade’s plan.
The ultimate challenge in all this is funding Metrolinx’s $50 billion transit expansion plan – closer to $75 billion with inflation – slated to stretch over 25 years. The Board of Trade, to help offset the immediate annual $2 to $3 billion needed, recommends a 1 per cent regional sales tax, a $1-a-day parking space levy, a 10¢ per litre fuel tax and tolls for single drivers using high-occupancy lanes on major highways.
These charges are generally accepted by many transit experts as some of the most practical in terms of implementation, their ability to effect behavioural change and to bring in sufficient revenue. All have been used elsewhere, so their economic impacts and efficiency can be measured.
But there must also be a sense of fairness. Politicians need to ensure that their plan does not penalize only commuters, many of them, from the suburbs and the 905, badly served by public transit.
If people feel the tax system is equitable, that the rich are paying their share and no one group is overly put-upon, they are more likely to accept new dedicated taxes and resist the attempts of politicians in years to come to undo them. (Think Ford and the Vehicle Registration Tax.)
The Board of Trade has obviously considered this and smartly avoided, for the most part, advocating for tolls – likely an explosive issue in the run-up to a possible provincial election next year and a certain municipal one. Instead of a complete toll system, the board calls for more limited charges on high-occupancy lanes – meaning those driving with a passenger would go free of charge.
Though not a bad idea, it seems an unneeded distraction for the $25 to $45 million the Broad of Trade thinks it’s likely to bring in and will not have a serious impact on congestion.
On the other hand, a gas tax in the 10¢ per litre range would be easier to implement than tolls, save hundreds of millions spent on new tolling technology, and tax cars in general, not just commuters on major highways.
This tax by definition dings fuel-inefficient vehicles at higher rates. It could be indexed to rise automatically by 1¢ or so every three to four years without further legislation, to deal with inflation and increasing fuel efficiency that will reduce the tax’s intake. The board estimates that this tax would bring in $640 to $840 million per year and push more people to use public transit.
The parking levy, too, is both a good revenue generator and a way to encourage public transit ridership. The one problem with the board’s $1 a day idea is that at that level it could generate political push-back. It might make more sense to phase in a charge starting at roughly half that amount. The difference could be made up over 25 years by escalating the fee in increments. At $1 a day, the levy is slated to bring in $1 to $1.5 billion a year. Borrowing against future revenue in the early years would get projects moving and make it harder to remove or reduce the tax later.
Finally, to raise the last billion or so, the board proposes a 1 per cent sales tax increase, expected to raise an additional $1 to 1.6 billion. Economists suggest that sales taxes are one of the least harmful to the economy. Since everyone in the region benefits from transit expansion in one way or another, this is close to equitable, though not as fair as income taxes.
Something would need to be done to redress the fact that a sales tax hits low-income people disproportionately hard. If $100 to $200 million were committed to creating a low-income transit pass as well as providing the kind of rebate the HST allows, that burden would be eased.
Together, these taxes and fees would bring in $2 to $3 billion once offsets like rebates were paid for.
We all have to recognize we need to ante up as taxpayers and users of transportation infrastructure – an added $300 to $400 per person per year is required to create a network of hundreds of kilometres of new subways, LRTs, BRT (bus rapid transit) and new GO electrified lines, as well as thousands of kilometres of new dedicated cycling infrastructure and millions of hours of bus and rail service add-ons.
But to make the process fair and acceptable to all of us, we’re going to have to tackle the inequity of our tax system.
CASH POT
Taxes and fees proposed by the Toronto Board of Trade for transit, and their payouts
• 1% regional sales tax $1-$1.6 billion
• $1/day parking space levy $1.2-$1.6 billion
• 10¢/litre regional fuel tax $640-$840 million
• 30¢/km high-occupancy toll $25-$45 million
Original Article
Source: NOW
Author: Adam Giambrone
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