Archived columns and blog posts by Matt Elliott

Wynne backs off on transit funding, ending the 'adult conversation'

By: Metro Published on Fri Mar 14 2014

GTA residents have been told for the last few years that the region needs to have an “adult conversation” about transit funding. But after Premier Kathleen Wynne visited an average Toronto family in an average Toronto home to make a transit funding announcement Thursday, it became clear there are no adults left in the room.

Not at the political level, at least.

Wynne took two key transit funding measures off the table, vowing that her government would not raise the gas tax or the HST to pay for transit. It was an outright rejection of the transit advisory panel she commissioned last year, whose recommendations hinged primarily on increasing the gas tax — which is lower in the GTA than it is in both Vancouver and Montreal.

Take the gas tax out of the advisory panel’s recommendations, and all you’re left with is a modest corporate income tax increase — the panel recommended 0.5 per cent — and the possible redirection of a portion of existing HST revenue. But those two tools alone are only projected to raise about $267 million, or 13 per cent of what Metrolinx hoped to raise to fund the Big Move. Even if you leverage that with some debt, it's barely enough to build one kilometre of underground transit per year.

Wynne did point to other sources of revenue that could make up the difference, but most of the remaining revenue tools under discussion are either politically challenging, have significant overhead or don’t raise enough to really put a dent in what the GTA needs to get people moving. They could return to the idea of high occupancy toll lanes, but those are only projected to raise about $25 million a year. Highway tolls or parking space levies could raise billions, but can’t be implemented quickly and would bring significant administrative costs.

After a long consultative process and a gaggle of reports, Wynne is effectively left with just one option that will actually raise revenue for immediate transit funding: the income tax. Of course, that isn’t so much a new revenue tool as it is the primary revenue tool that has made government work for a century.

A sharper increase to the corporate rate along with an increase to the personal taxes paid by high-income earners would produce the revenue we need. It’s not a bad option, really. It’s a more progressive way of raising needed revenue, and everything the government needs to start collecting it is already in place.

But the possibility of raising income taxes hasn’t been part of this transit funding discussion since pretty much day one for a reason: it feels like political suicide. After backing off every other proposed form of revenue generation, it's hard to be optimistic that Wynne will support something as contentious as an income tax hike. Especially when the opposition parties have shown little interest in really supporting transit expansion.

It's more likely that the Liberals will fall back on the tried and true strategy of delaying while blaming the federal government. They’ll talk up all the investment they’ve made in transit over the last decade, while casting a finger at Prime Minister Stephen Harper for neglecting the federal government’s role in infrastructure funding.

They’ll have a point, but it won’t really change anything. The federal government isn’t going to care. Money will not come. And without immediate plans to raise revenue to build transit, congestion across the GTA will get worse. Our economy will suffer as businesses look to set up shop in regions that don’t have such ridiculous traffic problems. And so there will be less money and fewer jobs for residents.

But, hey, you won’t have to pay any extra tax on gasoline and no one’s gong to make you pay the same sales tax rate you paid in those terrible days of 2005. So that's a bonus.

This post was originally published at on 2014-03-14T00:00:00.000Z

About the author

Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
Website / Twitter / Email Archived columns and blog posts by Matt Elliott


Follow Me on Twitter

Recent Posts

Recent Comments