Inside Logistics

Metrolinx proposes fuel tax and HST increase to fund transit

OTA voices concerns about effect on trucking industry


May 28, 2013
by MM&D staff with files from the Canadian Press

TORONTO, Ontario—Metrolinx has unveiled the plan detailing how it intends to fund transit initiatives in the cities of Toronto and Hamilton and the surrounding areas.

The Ontario government agency, whose mandate is “to improve the coordination and integration of all modes of transportation” in the region, said it needs $2 billion per year for “The Big Move”, its 25 year infrastructure improvement plan.

To get that $2 billion, Metrolinx proposes:

  • A five-cent per litre fuel tax
  • A regional increase in the HST to 14 percent from the current 13 percent which would bring in $1.3 billion a year from taxpayers in the region, after deducting $105 million in tax credits for lower-income households.
  • A 15 percent increase in development charges
  • A off-street parking levy of approximately 25 cents per day

The money would be used to pay for over 400 kilometres of new and improved public transit. The HST increase would bring in the most funds, while the other three would raise about $780 million.

But Metrolinx’s focus on transit and the movement of commuters is troubling to some businesses and organizations, including the Ontario Trucking Association (OTA).

“There is a question whether it is fair that truckers are asked to pay for transit,” said OTA president David Bradley. “Unlike motorists, who have a choice in terms of whether to take transit or continue to drive, truckers have no such choice.

“I understand the argument that transit can help alleviate highway congestion, but it depends on whether people will actually get out of their cars and take transit. Regardless, the costs of a new fuel tax will have to be passed along to shippers through fuel surcharges.”

Bradley said by tightly focusing on transit, Metrolinx may not be seeing the bigger view of the causes of congestion.

“Goods movement received only a passing, over-simplified glance in the Big Move,” he said. “An efficient system of roads, highways and bridges in the region and throughout the province is needed and all the monies raised from the industry by fuel taxes and commercial vehicle registration fees—which are in the process of being raised by 70 per cent incidentally—should be dedicated to that purpose through a specific highway trust fund on a provincial basis.”

Despite its concerns, the OTA expects to be involved in the upcoming consultations that are being triggered by the proposals.

Premier Kathleen Wynne wouldn’t say whether she’ll implement Metrolinx’s recommendations, saying she’ll take it “under advisement” and consult the public first.

“I know that the congestion situation in the Greater Toronto and Hamilton area cannot be allowed to continue, and so it is absolutely critical that we have a dedicated revenue stream,” she said in the legislature.

Legislation to implement the new fees will likely come in spring 2014, the Liberals said. But they need the support of at least one of the opposition parties to pass it, and both the New Democrats and Progressive Conservatives say they oppose any new levies.

Metrolinx tried to limit its proposed levies to the Toronto and Hamilton areas, but the agency admits that may not be possible. The HST increase may need to be implemented province-wide, because of the way the tax is administered. If that happens, Metrolinx said Ontario should direct the revenue from outside the GTHA to priority projects in those other municipalities.

Ontario can change the rate of the provincial portion of the HST once a year. But the federal government, which administers the HST, isn’t in favour of a hike.

“As you all know, I do not believe in tax increases,” federal finance minister Jim Flaherty said in a statement. “Ontarians pay too much tax as it is.”

If all of the proposals are approved by the provincial government, it is projected the average household in the Greater Toronto and Hamilton area may end up paying $477 more a year in taxes to expand public transit and shave five minutes off the current average daily commute, according to Metrolinx. Other calculations estimate it would cost an additional $977 to a family of five with an above-average income, two cars and driving 40,000 kilometres a year.

While Metrolinx’s proposal is comprehensive it doesn’t present the only options to pay for transit expansion.

Ontario transportation minister Glen Murray said there are other possibilities to fund the 25 year plan.

“There’s all kinds of other measures, post investment tools, pay-as-you-go,” he said. “There’s a lot of things we want to do to make sure we’re getting the greatest possible value for every dollar that we spend.”

Wynne has already ruled out hiking property taxes, but is in favour of creating so-called high occupancy toll lanes which drives will be able to use even if they are the only person in the car, as long as they pay for the privilege.

Some people will oppose the new taxes, but congestion is taxing people in the region by $6 billion a year, Murray said.

“No one is particularly pleased about that,” he said. “That translates for families into less summer jobs for their kids, excessive costs for businesses that reduce their investments, and lower household incomes.”