How to Fund Transit

Metrolinx, the provincial agency responsible for transit, has released its short list of options to potentially fund transit expansion in the Greater Toronto Area (GTA.)  The list is as follows:

  • Developer Fee.  Basically developers would be charged a fee for every property they develop.  This would make a great idea.  And the closer to a ‘transit source’ that the property is located, the higher the fee.
  • Gas Tax.  This is a great idea – if you use a car, you end up paying for helping to fund transit.  Unfortunately with gas prices where they are, this would be political suicide for any politician to support.  Also, as transit cannot be ‘everything for everyone’ this hurts people who would use transit but cannot for one reason or another.
  • Employer Payroll Tax.  A tax on employers who run their businesses close to a ‘transportation hub.’  A great idea in theory, but with the economy the way it is, we need to promote businesses hiring employees not adding to their tax bills.  And as not every potential employee will have a car, perhaps the tax should work the other way around – be close to a transit hub, and you get a tax break.  Put your business away from transit and you pay more taxes.
  • Land Value Capture.  Basically charge developers more for the land they purchase to develop.  A great idea in principle, but one could argue that it could be charged to everyone, and that would likely make a political no go.  We want people to be able to afford to live in the GTA, and not force people to move away.
  • Highway Tolls.  I totally agree with this idea.  The idea is to charge people travelling on highways, much like they do with the 407, only that the money would go to transit.  A great idea.  You want the option of a fast route, you pay for it.
  • High Occupancy Toll lanes.  A great idea – single occupant vehicles could use the ‘HOV’ lanes for a fee.  However, the previous option, highway tolls, would charge everyone which is better idea in my opinion.  Instead of charging a small number of people who use the highway, charge everyone.
  • Parking Fees.  All non-residential parking spaces would pay for their use.  This is a great idea, especially at subway and GO stations.  I say go for it.
  • Property tax increase.  The ‘old reliable’ for taxation for municipalities.  This is a good idea, and Toronto needs to charge a rate consistent with other cities in the GTA.
  • Sales Tax.  Increase the sales tax.  However, people have pointed out this would likely have to be done province wide as it would form part of the province’s portion of the HST.  However, nothing would stop the Province and the Federal Government from giving cities permission to join and on the HST and set their own amount.
  • Transit Fare Increase.  Basically, charge users to pay for transit.  This is certainly fair as users are the ones who are benefitting the most.  However, until we have reliable transit operation, this is also unfair.
  • Charge vehicles on every kilometre they travel.  A nice idea, but certainly hard to realistically implement.  Not a good idea in my opinion.

Some ideas that did not make the short list, but that I believe should have been, include:

  • $2 per day car rental fee.  Basically, the cost of renting a car in the GTA would go up by $2 per day.  A great idea to me for those who are not using a car for long periods of time.
  • Carbon Tax.  Tax carbons, it would also be great idea for raising funds for transit while being a benefit to the environment.
  • Vehicle registration tax.  Charge a person every time he/she registers a car.  If you want a car, you pay for the benefit of having a car.
  • New car tax.  Raises the costs of a new car, but as with the vehicle registration tax, if you want a car you pay for the benefit of having a car.
  • Income Tax.  I know, it’s another tax.  But as the Government gives you a tax break for using transit, if you don’t want to use transit then you pay for not doing so.
  • Driver’s Licence Tax.  Basically, if you have a driver’s licence, you pay extra for it.  If either car tax above is used, then drop this one.  You can’t blame all drivers for using a car, sometimes they have no other option.
  • Toll Downtown roads.  They do this in London UK.  Basically, if you drive into the core of the city, you pay a toll.  This is a great idea, and a downtown resident could be given a reduced toll free.

How do I think Metrolinx come up with more money?  Simple, through a regional sales tax, vehicle registration tax, highway toll. and tolling downtown roads.  The downtown core is well supplied by the Yonge and University lines, as well as the King, Queen, Carlton, and Bathurst, Spadina, and Dundas cars.  Plus the bus operations, especially the Bay bus.  So transit can get you where you need to go downtown.

If you want to use a highway, then pay for it.  I think a highway toll is a great idea because of this.

A regional sales tax, which may appear to hurt ‘the little man’ is a good idea too as ‘the rich’ tend to spend more money and purchase more ‘high cost’ items which means they pay more in sales taxes.  So it is blind to your income.  The more you spend, the more you pay.

Paid parking would also help – and encourage people to get out of their cars.  If you use it enough at a ‘transit hub’ (i.e. a GO or subway station), then you get a tax break just like you do with your transit expenses.  Again, an encouragement to pay in the suburbs and use transit.  And the more fares a transit agency receives, the more money it has to pay its own costs.

We need to have a revenue source for future operating and capital costs of transit, as well as Governments (Federal, Provincial, and Municipal) that actually support transit and will actually dedicate revenues to transit for both the short term and the long term.


About Toronto Streetcars

I am a transit enthusiast.
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2 Responses to How to Fund Transit

  1. Moaz says:

    My personal view is that we need to focus on revenue tools that are simple to implement and can be spread out so that no one group feels like they are taking an unfair hit.

    The mix of sales tax, fuel tax and parking levy, at the levels proposed by the Toronto and Region Board of Trade will cover all of the 2 billion per year needed (according to Metrolinx’s online revenue tool) … and I think that simpler works better in this case.

    As for tolling, I believe that a mix of HOT lanes (on the 400-series highways) and tolls (on the DVP and Gardiner east of the Humber) is the best solution to start, followed by implementing the downtown congestion charge.

    What I would like to see is the Express Lanes (on Hwy 401, 403, 404, 427 and Gardiner) on our 400-series highways converted to HOT lanes, with added/converted HOV lanes on the 400 and 410 and expansion of HOV lanes on the 404.

    HOT on the express lanes would cost less than HOT on regular highways and the cost of full tolling, because the express lanes have fewer entry and exit points.

    • The fuel tax is a nice idea, but a large percentage of gasoline costs are already tax related. I’d like the Federal Government to give one percent of what they receive in current fuel taxes to the cities for transportation costs. Not everyone can use transit, walk, or ride a bike to where they are going, some people have to drive to where they are going, or have to drive for a living.

      I am not a fan of the charging single person vehicles for using HOV lanes. Why? Simple, charge too little and those lanes will fill up with single person vehicles. Charge too much and no one will pay it. Better to toll all the the highways (if you don’t want to pay for saving time by travelling on a highway, take a regular road) and toll the core streets in Toronto. That way you raise the money for transit yet drivers still have a ‘free option’ (i.e. regular roads, walking) or a ‘cheaper option’ (i.e. bikes or transit) to paying to go on the highway or driving into the downtown core.

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