Day: October 30, 2007

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How Ottawa Just Raised Your Metropass by 50 Cents

While you are all out spending your hard-won cut in the GST, one little note:

The after-tax cost of the Metropass just went up from $84.50 to $85.00.  Why, you ask?

The tax credit for passes is tied to the tax rate on the lowest income tier, and this will go back to 15% from 15.5% according to today’s announcement.  This means that the rebate per $100 Metropass just went down by 50 cents, or $6 over the course of the year.

Also, of course, this has always been a non-refundable credit, and so those who have no taxable income pay full value for a pass while people like me get the subsidy.

It’s no secret to regulars here that I don’t believe in tax-based incentives and prefer that funding go directly to agencies that deliver service.  If the tax rebates for all of the roughly 250,000 Metropasses sold each month came to the TTC as a subsidy, they would receive about $45-million annually from Ottawa.  This would contribute to better service for everyone, whether they used a pass or not.

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A Made in Ontario One Cent Solution

Later today, we can expect our friends in Ottawa to announce that indeed the GST will be reduced from six to five percent.  Once the dancing in the streets winds down, we need to focus attention on Queen’s Park.

The idea that one cent of the GST should be redirected to municipalities was first raised by Mayor Miller of Toronto and gradually attracted support from other “big city” mayors across the land.  Even outgoing Ontario Finance Minister Greg Sorbara endorsed the idea about a week ago.  Alas, Stephen Harper’s government wants nothing to do with this scheme.  That’s their prerogative.

However, if Queen’s Park were really serious about funding local governments, they would move into the space vacated by Ottawa and raise the PST by one percent.  This money would be dedicated to Ontario municipalities.

Of course, Dalton McGuinty would have to actually defend this position saying that cities and towns really need the money, and if that nasty Mr. Harper won’t give it to them, our Dalton will simply do the taxing at the provincial level.  It’s easy to blame Ottawa for problems, much harder to take action locally.

The marginal cost to Ontario taxpayers would be zero — one percent is one percent regardless of who collects it.  The cost to Queen’s Park would be zero because this would be new revenue simply passed through to local governments.

This approach would undermine the campaign to get Ottawa at the table for transit funding.  However, we will wait a very, very long time before a federal government of any stripe makes real commitments to transit that don’t come with severe time and eligibility constraints.  (Even the Liberals would only fund new hybrid buses and other projects that could be construed as a contribution to the Kyoto protocol goals.  Replacement and rebuilding to maintain what we already have wasn’t on the table.)

We really need to start funding transit infrastructure and operations with local provincial and municipal revenues.  Transit should not be hostage to Ottawa’s hatred for the municipal sector and for Toronto in particular.

Is anyone at Queen’s Park listening?