Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

“Mayors consider raising taxes to pay for TransLink”

with 17 comments

The Vancouver Sun headline is deliberately misleading to attract attention. One Mayor – Peter Fassbender – is anticipating what might happen at a meeting next week. Nothing in the story is news, and nothing in the story suggests that any other Mayor has supported this idea publicly. The provincial government has made it very clear that it wants property taxes to rise to pay for the Evergreen Line. They have been very clear about that. Fassbender has been talking up the role of the Mayor’s Council – but basically the province is not at all interested in making the Mayor’s lives any easier.

Martin Crilly puts out a report - which is fine – talks about road pricing. But that isn’t going to happen – and couldn’t happen fast enough anyway to dig Translink out of its present hole.   No-one needs to listen to the Transit Commissioner: he is irrelevant.

The gap between the gas tax inside the Metro boundary and just outside it is already large – and is a gift to gas station operators on the outer edge, since they can appear to sell cheaper gas. But the difference between a gas station in Aldergrove and one in Abbotsford is much less than the tax difference in the two jurisdictions. The government is so unpopular now that it could almost do anything it likes without making matters worse – but since Gordo got back from his holidays, the mood has changed. He obviously wants to get his own ratings up – and, bafflingly, he seems to be succeeding. No-one ever went broke underestimating the intelligence of the public. Of course the spin would be to blame the tax increase on Translink – but not nearly enough people would believe that – would they?

I think Fassbender is trying to soften people up for the increase in property tax which is about the only option left open – other than saying no to a new transit line once again. Last time the Mayors did that they lost control of regional transit. Not many Mayors outside of the north east sector are willing to see their voters’ taxes increased to pay for the Evergreen Line – and certainly none south of the Fraser where transit remains undersupplied after ten years of regional “direction”.

“We have a window of time to either come up with our commitment or the government will have to do something else,” Fassbender said. “[A financial supplement] is the only way we can come up with our share. What it looks like I don’t know yet because it hasn’t been developed.”

That sounds a lot like capitulation to me

UPDATE

It is worth taking a look at Frances Bula’s blog – she seems to be talking to the Mayors, although only Corrigan (of course) was willing to go ont he record. The real difference is to what is above is their perception that new sources of revenue (something the province was NOT willing to discuss before) are now “on the table”.

“I don’t think we’re caving to anything,” said Langley mayor Peter Fassbender, the chairman of TransLink’s Mayors’ Council. “If the province was saying, ‘We’re not willing to talk about other options,’ this would be a no-go. But I see a willingness on their part to say, ‘Let’s put everything on the table.’”

I tend to agree with Corrigan

Burnaby Mayor Derek Corrigan believes that regional mayors are about to get taken for another ride by the province, one where they’ll be left paying all the bills again.

“When will they learn? They keep buying into these promises and then they get taken to the cleaners.”

Interesting to note too that the people who read this blog care a lot about their cell phones, and tramcars of course, but have much less to say about taxes.

Written by Stephen Rees

September 16, 2010 at 9:50 am

Posted in transit

Tagged with ,

17 Responses

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  1. capitulation? Hasn’t the idea of translink raising funds regionally been there from the start? In 1999/2000, the $75 vehicle levy was a good thing IMO, but we bailed on that.

    Anyway, I’m glad that everyone is talking, but i’ll wait and see what is announced.

    mezzanine

    September 17, 2010 at 8:31 am

  2. Vehicle levies tied to use seem fair to me too, but any talk of extracting more money from drivers to pay for alternatives seems very unpopular with the general public.

    David

    September 17, 2010 at 11:28 am

  3. It wouldn’t matter what solution they come up with. As any increase or new taxes or fees will be disliked by the general public. Nobody likes to pay more for any service or product. But sometimes the unpopular choice is the right choice.

    While I don’t mind paying a bit more on my property taxes to help pay for transit improvements. The part I don’t like is it doesn’t give any financial incentive for someone who drives to take transit.

    Fuel taxes are about the only thing we currently have that financially gives an incentive for a driver to park their car and take transit.

    The problem with fuel taxes is what happens in the future when electric cars start to become more mainstream. At that point people won’t be going to their local fuel station to fuel up. But will be plugging in at home. Now how do you charge a certain tax on electrical usage when you don’t know how much electricity was put into the vehicle. Which is why I feel they seriously need to look at gps tolling or mileage tolling or point tolling (example bridges). That way people are charged for using the physical vehicle and not the amount of fuel. Of course I could list off all the reasons why it would never happen. I’m sure though that everyone has heard them and knows them.

    A vehicle levy punishes people for having a vehicle, whether or not they drive it or not. It gives no incentive to drive less.

    Paul C

    September 17, 2010 at 12:43 pm

  4. I imagine there will not be any single solution to the funding woes. Translink would be able to spend as much money as we give them.
    Perhaps a complete sepearation of operatations funding and capital funding would be required.
    What do people think of a new property tax structure to help with capital costs. Right now in the COV if you get a new lane/sidewalk, you pay a portion (25-50%) of the capital costs on your property tax over a period of ~6yrs. Perhaps a similar style increase would work for new transit services in the owners immediate area. Ie.. if you are within ~100m you pay more, a bit less if you are ~200m and so on until a certain distance. The owners might complain but we know that they would still stand to gain. (from the increased value of their property near transit, and the added convienence)

    Joe Just Joe

    September 17, 2010 at 1:37 pm

  5. Like the Mayors, I am against property tax. I think we have to move towards user pay – but ONLY if that means road user pay too. When the GVTA was created, the regionally collected – previously transit only dedicated – gas tax was increased. But roads, bridges and a ferry were downloaded too. And Translink was constrained in its use of tolls to paying for new road infrastructure – hence the (underused) Golden Ears Bridge. Of course we need road pricing that varies by time of day and congestion and of course we won’t get that now or any time soon. Whatever we get will be second best – and gas tax is the nearest to one that makes sense. The vehicle levy might work if it included variation for distance driven and engine size (or fuel consumption) but that is probably too far from point of use to affect mode choice very much. And it has to be ring fenced now so that it ONLY goes to transit and not yet more road projects – like the Patullo Bridge. BUT it will encourage more cross boundary shopping for lower priced gas.

    Stephen Rees

    September 17, 2010 at 2:00 pm

  6. Some places have a tax on wages (businesses with less than 9 employees are exempt).
    In the wealthiest districts of a metropolitan area the rate is at the highest level and decrease from there. According to a document on that subject “Having the tax rate vary by location, with people who are more likely to be able to take advantage of public transportation paying more, makes a lot of sense”

    Obviously wealthy people in these places DO use transit..OR they are willing to pay for transit to help their personal maids, cooks etc. commute easily and relatively cheaply.

    see a comparison of the financing of 2 transit systems: http://thetransportpolitic.com/2009/03/04/how-to-fix-transit-financing/

    Of course in other places (including some towns in Canada) the various levels of governments believe that transit is at least as important as roads and fund it accordingly…only in B.C. etc.

    Red frog

    September 17, 2010 at 8:37 pm

  7. hopefully, mayors will not entertain the idea of a tax on wage. by the way people having personal maid, cooks usually don’t rely too much on wage for their income.

    I will give to RefFrog, the French example of Liliane Bettencourt. richest Lady of France, whose has never works (so never get wage to tax).

    Paul C says “A vehicle levy punishes people for having a vehicle, whether or not they drive it or not. It gives no incentive to drive less.” and I agree with it.
    The key point here is to favor “sustainable” tax, means tax providing incentive for “virtuous” behavior which tend to lower the need for public $.

    voony

    September 17, 2010 at 10:58 pm

  8. @Stephen

    “The vehicle levy might work if it included variation for distance driven and engine size (or fuel consumption) but that is probably too far from point of use to affect mode choice very much.”

    If I remember correctly last year when they had the option for the $450 Million plan. The vehicle levy had a different price depending on the size of the vehicle.

    There was no difference mind you on the distance driven. Which really is bring back the idea of gps or mileage based tolling.

    Gas taxes mind you are currently they best and fairest form of usage based tax that we currently have.

    Paul C

    September 18, 2010 at 2:25 am

  9. Voony, the tax on “wages” is paid by BUSINESSES, not by individuals, and is based on the total amount of all wages, salaries and benefits paid by a company to all their employees, from a part-time cleaner to managers and the CEO.

    That tax on salaries, wages etc. is actually called a transport tax and provides a sizable steady income for transit systems. 36% of the revenue of the Greater Lyon transit system and nearly 40% for the Greater Paris transit.
    I am not saying that it is the best thing ever but it works. The US author of the study think so anyway.

    Maids and other household help aren’t uncommon at all in Europe and other continents. My own boss, a builder with a relatively small business, had several, like many of our clients and other people we knew (doctors, notaries, lawyers, school principals, hospital directors etc. etc. )

    The house I rented for a modest amount, in my first paid job in France, came with a weekly cleaning lady. When I was a student in “socialist” Finland I met several families that had maids at home.

    In France anyone with household help in their home can deduct from their income tax a portion of the wages and benefits (health care, vacations, etc.) paid to their household staff (ironically that law was voted when the Socialist party was in power)

    Madame Bettencourt (I have read about her and her late husband–a politician–for a long time, well before we heard about her here) fortune come from L’Oreal, a company that likely pay a pretty big amount for that transportation tax, considering how many employees they have in France alone…

    Red frog

    September 18, 2010 at 12:27 pm

  10. OK I take back that shot about not having much to say about taxes

    Gas Tax Issue – note what happened in many US systems when gas consumption fell – so did transit revenue. That happened here too – indeed it has even been suggested (by Ken Hardie, no less) that the better the transit system gets at winning people out of their cars, the less revenue it has.

    Stephen Rees

    September 18, 2010 at 1:36 pm

  11. A vehicle levy tied to both the efficiency of the vehicle and your insurance rate class would be a step in the right direction. Those insured for business or to/from work would pay a higher fee than someone whose vehicle is only insured for pleasure.

    Back when I was a kid my parents had to bring their car into a government inspection station to have the car tested before they could renew their insurance. They tested the brakes, the proper functioning of headlights, brake lights and turn signals, the proper alignment of the headlights and a number of other things. Had the stations not been shut down they could have evolved into doing AirCare and odometer checks. Not only would our roads be safer today we’d have a fair system for assessing a vehicle levy.

    David

    September 18, 2010 at 9:38 pm

  12. RedFrog,
    arguing who is paying the tax on “wages”, either the employee or employer is kind of specious.

    My employer pay ESP, CPP… but that is much less on the paycheck I collect at the end of the month…
    In France, they have not only a transportation tax on the wage, they have an housing tax (to pay for social housing), a training tax (to pay for continuing education), an apprentice tax,…you name it you have it…all taxes on wage (not on capital gain, or dividend, what make the bread and butter of the rich) and 1.7% here, added to 0.5% there…end up to more than 80% of tax on wage. French taxation system is one of the most regressive in the developed world (see this eye opening book on the french system http://www.cambridge.org/uk/catalogue/catalogue.asp?isbn=0521605202 ), and I suspect that if you are in Canada and not in France, it is due in part to the insane French taxes on payroll.

    Regarding David comment on
    “levy tied to both the efficiency of the vehicle and your insurance rate class”,

    I have a vehicle insured for “pleasure”: the saving is absolutely ridiculous compared normal insurance: that is a total shame of the scandalous ICBC monopoly:
    It is because ICBC is so outrageously expensive and don’t give any real possibility to insure your vehicle for sporadic usage, people don’t have reason to drive less.
    So I could be wary to index anything against an ICBC scam. At least if there is one thing France do better than BC, beside wine and food, it is automobile insurance, way much cheaper in France than in BC by the way, basically twice cheaper (like wine ;)

    voony

    September 18, 2010 at 10:25 pm

  13. Stephen does bring up a very good point. The more people we get using transit. The less people that are driving. With the less people driving that means less revenue that there would be from the gas tax.

    Paul C

    September 19, 2010 at 12:25 am

  14. @ Redfrog,

    Another issue with payroll taxes is that they too fluctuate with the economy. people may need to travel less during layoffs and a contracting job market and perhaps there is some justification, but you can’t argue that flat taxes (property tax and a base level cehicle levy) provide stable income and better planning for transit authorities.

    ============

    “Imagine trying to balance your family’s budget when you don’t know how much income you’re going to have. Because payroll taxes make up 55% of TriMet’s income, that’s the position we’re in. Each year, we do the best we can to project what our income will be, but the recession and double-digit unemployment directly impact payroll taxes, which translates into less income for TriMet. Unemployment also affects ridership. In the past 6 months, bus ridership has declined 10 percent overall and nearly 16 percent during rush hour, which means additional lost income.

    Last year, we realized our budget was out of balance by $31 million due to lower-than-expected payroll tax revenues. We made up this shortfall through a combination of internal cost-cutting (hiring and salary freeze, executive furloughs and reduction of TriMet staff by 120 employees) totaling $10.5 million and MAX and bus service cuts resulting in $17.5 million savings.”

    http://trimet.org/openhouse/budget.htm

    mezzanine

    September 19, 2010 at 8:21 am

  15. ^tha’t not to say we can’t add on supplement fees for gas guzzzlers or provide distance-based levies on cars. but we have to be careful to avoid large year-to-year fluctuations with operating budgets.

    mezzanine

    September 19, 2010 at 8:32 am

  16. The employer, NOT the employees, pay 100% of the French transportation tax and the tax on social housing.
    Employees can get a rent subsidy and a transportation subsidy.

    The employer pay a far bigger share than the employees for health care, pensions, life insurance, work related education etc. Roughly twice what the employee is paying.

    I only passed along a link to an article by a US guy that seem to know about transit…I didn’t even know about that transport tax myself..

    Here is another article on the subject, from the UK this time: http://www.guardian.co.uk/commentisfree/2009/aug/16/transport-tax-france-uk
    I read French papers practically daily and haven’t read anything against the transportation tax!

    It seems to be working fine, even in times of economic crisis, judging by all the rail lines, transit systems etc, that are being built, renovated etc.

    Don’t forget that Metropolitan France has nearly 63 million people (according to Wikipedia) in a country 1/2 the size of B.C. so obviously a tax like that transportation tax can buy a lot of tracks, vehicles and other stuff..

    I didn’t came to Canada because of the taxes in France, as I could well afford my modest tax bill. I came to Canada because I wanted to live in a foreign country..I got the virus after studying then living in a couple of foreign countries and couldn’t shake it off.

    Canada, at the time, was the easiest country to emigrate to, and it looked like a very neat place, where, according to the Consulate guy that interviewed me, many people, even outside Quebec, spoke French.

    This sounded quite plausible as, in the small German town where I used to work (for a French company..using English 1/2 of the day), the store owners and service industry people did speak fluent French, as they did in all the other European countries I had visited by that time…

    Red frog

    September 19, 2010 at 11:31 pm

  17. “The employer, NOT the employees, pay 100% of the French transportation tax and the tax on social housing.”

    That is like to explain that “the oil companies pay the gas taxes, NOT the motorists”…what can be true, it is a question of viewpoint.

    regarding, the sensitivity of the tax to economic condition: French labour market is very “rigid”, so less sensitive to market condition than other market, noticeably US or Canadian ones.

    regarding, French opposition to the transportation tax,: as mentioned this tax is a drop in a bucket: people will oppose to the 80% payroll taxes in a whole, not single out this 1.7% transportation tax, but there is this view in France that payroll tax are paid by “businesses” and not people, so the opposition to payroll tax follow a political agenda.

    voony

    September 20, 2010 at 9:08 am


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