Wednesday, February 6, 2013

0.5% Regional Sales Tax to Pay for Transit?

If you haven’t heard already, TransLink Mayors’ Council on Regional Transportation sent an open letter to the Minister of Transportation, Mary Polak, on January 31st with a new list of potential funding sources to pay for much need transit improvement projects in our region. One of the funding sources that the mayors have proposed is a 0.5% regional sale tax for Metro Vancouver. According to an article in the Surrey North Delta Leader, that tax could generate $250 million per year in new revenue for transit.

Sales taxes is actually a pretty good way to fund transit projects as it will generate more money when the economy is good and less when the economy is not doing so hot. It is also naturally linked with inflation, so the mayors’ wouldn’t have to be coming to the table every year asking for more money.

Another short-term funding source that the mayors want to tap is a $38 vehicle levy which would generate $50 million per year in revenue. Other longer-term funding sources that the mayors want to look at include road pricing and distance-based road user fees. To put things in perspective, there is around $6 billion in transit infrastructure improvements that have been identified which include the UBC and Surrey rapid transit lines. Asking for a 0.5% sales with a vehicle levy is not out-of-line.

In fact, sales tax is used all over the US to pay for transit improvement projects. Interestingly enough, people actually vote to tax themselves to pay for transit. Our neighbours in Seattle have a voter approved 0.9% sale tax to pay for transit expansion in their region.

I have to say that I’m impressed that the mayors are spending their political capital to fight for improved transit in our region. Not surprising, the province which has the authority to implement the vehicle levy and sales tax is still reluctant to give our region the tools it needs to fund transit.

Transportation Minster Mary Polak has asked for a plan on how the proposed revenue sources will be used before considering approving them according to News1130. I have to wonder if this is just stalling to make sure that transit funding doesn’t become an election issue as there are already plans on how TransLink would spend the money. It seems to me that the region’s mayors are willing to put their necks on the line to improve transit in our region, but the province still remains reluctant to let go of the purse strings.


Anonymous said...

Correction - Seattle paid 0.9% of sale tax to Sound Transit (regional) and another 0.9% to King County Metro (local), for a total of 1.8%.

Jack Hope said...

Also should be noted that Metrolinx, the agency that is responsible for regional planning in Southern Ontario, is considering implementing a regional sales tax as part of the funding strategy for their 'Big Move' plan.