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.

5 thoughts on “How Ottawa Just Raised Your Metropass by 50 Cents

  1. Steve

    Given that the increase in the standard metropass, the feds will be rebating $1.39 more in FY2008 than FY2007 (at constant 15%, 16.35 vs 14.96). As you know my argument would be in favour of refundable credits, since I don’t believe that simply spending the same amount on “the system” is as compelling an incentive to car drivers as “getting a cheque from the government”.

    Steve: The point is that the rebate percentage goes down even as the cost of the pass goes up, but, yes, I agree that it should be a refundable credit.

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  2. This is a very misleading post. Yes, the metropass credit may have declined by $6 annually but the tax cut means I pay a couple hundred dollars less in tax annually (I forget when the 15% tax bracket ends). Are you seriously arguing that a tax cut means we have to pay more money?

    The GST is such a regressive tax that instead of arguing for an increase in the Ontario sales tax to cover the GST cut you should be arguing for a vehicle registration surcharge on luxury cars, or perhaps increasing the gas tax on premium gas, so that it’s the wealthy car owners that subsidize the cities and the TTC rather than the poor and the working class who need the 50 cent in sales tax they save when they go have a beer or Swiss Chalet after a draining week.

    Steve: The point I was trying to make is that a side effect of the change in the tax rates is that the deduction specific to transit passes goes down. People are always doing the math based on trip multiples, and anything that raises this multiple is hurtful to transit. Yes, they may get a bigger general tax cut, but they don’t take that into account.

    The real problem is that this deduction does nothing to pay for additional service that would make the system more attractive, and that it is not refundable so that people who pay no tax at all cannot benefit from it.

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  3. Why would I be mad about the feds raising the cost of my metropass by 50 cents, when the province jacked it up by ten bucks through inaction?

    Steve: You wouldn’t. As I’ve said before, I was trying to illustrate the way that the way taxes are implemented can have unexpected side effects, and contrasting the dollar value of all the tax deductions with the level of direct support to the transit system.

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  4. Maybe you should all run for office since you have all the solutions wich is to tax me to death!! as one government cuts taxes another raises them. Maybe you should study the economic impacts of your tax increases before you open your beak!! Maybe taxing you transit riders for the distance you all travel would make more sense to all of us. if you use it then you pay for it. ZONE FARES please return, if you all want expansion and better transit, you pay for it…

    Steve: The issue with tax revenue is the support of capital programs to expand and maintain the system, not the operating budget which is (partly) covered by fares. If riders were expected to pay the cost of building transit systems and buying vehicles, fares would be astronomical.

    The argument for provincial and municipal spending on transit is that this is cheaper than providing the road capacity needed to handle all of transit travel. There is no comparable tradeoff for the federal government who don’t pay any of the local transportation costs. “Cheaper” by the was is not just capital costs for roads, but the land lost to parking and wider streets.

    As for zone fares, I personally would love them because so many of my trips are short hops of 20 to 30 minutes and their cost would go down. The long-haul riders, who are already the hardest to lure onto transit, would be hit with higher fares and that defeats the very goal of expanding transit use in the suburbs. GO already charges roughly a fare by distance, but it is a premium fare, express system.

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