The Board of Trade Discovers Transit Funding

After years of howling that taxes in Toronto are too high, that no business would dream of locating here, that the Toronto economy is going down the tubes because politicians are not generous enough with their handouts, the business community has discovered transit funding as a major issue.

The Toronto Board of Trade published The Move Ahead:  Funding “The Big Move”, a document arguing that lack of infrastructure investment, specifically in transit, is a serious impediment to economic vitality in the Greater Toronto Area.  The Board’s report is based on a June 2008 Metrolinx report, but adds observations about the mechanics, implications and practicality of various revenue-generating measures, as well as examples of their use in other cities.

The possible tools are subdivied into three groups:

Large (Over $1-billion annually):

  • $1 per day surcharge on commercial parking spaces
  • 1 percent regional sales tax
  • $.10 per litre fuel tax
  • $.10 per km travelled toll on 400-series highways, QEW, Gardiner and DVP
  • unspecified per km toll on all auto travel
  • unspecified congestion pricing fee

Medium (Over $500-million annually):

  • National Transit Strategy modelled on Gas Tax (it is unclear how this differs from the fuel tax in the “large” list except that it would be charged at a national rather than a regional level)
  • Predictable Long Term Funding (apparently from general revenue)
  • Infrastructure Bonds (dedicated to transit projects rather than general revenue, possibly with associated tax incentives for bondholders)
  • Employer payroll tax at $250/employee or a tax of .35% on gross earnings
  • Tax Increment Financing (no dollar value assigned, predictability of revenue stream uncertain)
  • Land Value Enhancement (in effect, a local tax on property whose value rises due to transit investment)


  • High Occupancy Lane Tolls
  • Vehicle Registration Fees
  • Utility Levy


  • Full cost recovery transit fares (for operating and, possibly, for capital)
  • Alternative service delivery (typically PPPs)

I will leave interested readers to browse the details of the Board’s analysis, but this publication is useful on a few counts.  First, it brings the debate about transit financing — the amounts needed and the tools available — out into the open.  Queen’s Park’s desire to muzzle the debate until June 2013 was shortsighted when it was incorporated in the Metrolinx Act, and now downright foolhardy given the much-changed financial situation.  Second, it presents transit not as something we do for the poor, the aged, the downtrodden, but as an integral, core service to the entire region.  The embrace of this viewpoint by the business community is a vital change in the dialogue.

For those who know the Metrolinx 2008 report, the numbers are not particularly startling.  What is important is that there is no magic bullet, no simple tweak we can make on the taxation system, broadly speaking, that will generate the money needed to fund the capital and operating requirements of The Big Move, not to mention the large increases this will trigger in local transit service needs and subsidies.  The Board of Trade is fairly conservative in their expectations of the benefits and effects of various options.  Even for PPPs, the Board notes the importance of clear objectives for the partnership and, by implication, the requirement that such an arrangement exist for concrete economic reasons.

Notable by their absence are two fundamental issues:

  • There is no discussion of land use.  As the region’s population grows, the manner in which new residents and businesses are accommodated has a fundamental effect on the cost and structure of any new public transit services.   It may sound like a broken record to say this, but we can pay for expensive transportation through gridlock on roads and a scattered, underserved transit network, or we can force development to follow a “transit friendly” pattern.  The history of the GTA suggests that sprawl will not be contained politically.
  • There is no discussion of future energy pricing.  If energy cost and availability, coupled with commute distances and times, increase substantially above the rate of inflation, but average incomes fall due to international competition, there will be a much greater demand for transit service than even the most optimistic “Big Move” working papers forecast.  What would this scenario do both to the scope of transit construction and service, and the speed with which new and improved services must be implemented?

The Board of Trade has set the stage for the discussion, and Metrolinx must follow through on the challenge.  The agency must not simply react to short-term political and financial circumstances, but provide clear alternative plans showing “what ifs” for the future we might face in the GTA.

13 thoughts on “The Board of Trade Discovers Transit Funding

  1. I wonder what was the straw that broke the camel’s back and caused the Board of Trade to take this stance on public transportation?

    I suspect Dalton McGuinty’s $4 billion surprise that effectively neutered Transit City and The Big Move by extension might have contributed since it has been estimated that $5 billion a year in lost productivity due to gridlock is becoming painful to the B of T’s members. At the cost of $5 billion draining out of the economy a year, doing nothing or far, far less than originally promised is a very expensive way to save the Ontario government money.


  2. Land use is definitely a key point. When I lived in Pickering back in the ’90s, it was rare for me to leave my home without hopping into my car. Having residential areas completely segregated from commercial and retail areas makes it almost impossible not to drive. Mixed zoning is crucial, and is one of the fundamental requirements for successful public transit. Living in East York now, I find that it is rare for me to take the car whenever I leave my house. It usually stays parked while I walk or use the subway. They key difference is, of course, that where I live now there is mixed-use zoning. From bakeries, grocery stores, restaurants and banks to doctors, dentists and optometrists (and even a hospital), everything I need is within my neighbourhood.

    Another interesting comparison to note is that in Pickering, it is very common to see two or three cars parked in driveways, because every adult in any given household needs a car in order get around. On the other hand, most households on my street have just one car (and a few have none at all). So you can add all the public transit you want in a place like Pickering, but it won’t make too much of a difference given the way that city has been built. People will still find it necessary to use their cars.


  3. I thought that most people who study transportation wanted to encourage use of HOV lanes? The theory being that people will be more likely to want to ride share to take advantage of them.


  4. If I were dictator, I would make free parking for employees a taxable benefit and making free transit passes a non-taxable benefit.


  5. Read through the document. Some thoughts:

    1) Proposals listed in the group “Large” are the most feasible. The suggested magnitudes of parking surcharges, fuel surtaxes, and road tolls are quite reasonable, and if they can support a significant expansion of the transit infrastructure, then they certainly should be implemented.

    2) “Predictable Long Term Funding” may be a useful approach to operational subsidies, but gives little hope for transit network expansion. The problem is that new transit lines take very long to build and the benefits are in distant future. Conversely, the drawbacks of not building or delaying any given transit project apply to distant future. Given the fiscal challenges our society will be facing in the years to come (increased global competition, aging population, expensive regulatory requirements), any government will be strongly inclined to solve fiscal difficulties by cutting on transit projects, rather than health care, education etc.

    Dedicated revenue sources is the only practical way IMO.

    3) Employer payroll surtax is not a good idea; making the labor in the region even more expensive is the last thing we need these days.


  6. W. K. Lis said: “I would make free parking for employees a taxable benefit and making free transit passes a non-taxable benefit.”

    Good suggestion; as long as parking is taxable only for employees who actually use it.

    Recently, a number of City Hall employees received tax bills for free parking passes they were entitled to, even though some of them never used that parking, and some don’t even have a car 🙂


  7. I too lived in Pickering in the 90’s, but my experience was somewhat different from Leo’s. I found Pickering to be an excellent cycling city. Where I lived, practically everything was within 3 km. Shopping, the library, bank, rec. centre, church, GO station – all are within 3 km.

    I will agree with Leo’s comment about high car use, but that was just because people were (and are) too lazy to spend 10 minutes on a bicycle to get around.

    The transportation problem in Pickering is not primarily a land use issue, but a moral and ethical failing on the part of the population.


  8. I am glad more people are talking about funding transit besides the mayoral candidate Sarah Thomson. These funding schemes and whatever new ones come down the line I will probably back within reason. Toronto and Ontario are seriously falling behind in public transit, even some developing countries are pumping more resources then we are into PT. We have to find a way, not only to lessen our addiction and dependence on oil, but to keep this region economically vibrant AND not killing the environment at the same time.


  9. Its about time we really started having a serious discuss about dedicated revenue sources for transportation expansion.

    I feel the Ontario Government under the leadership of the Liberals lack any balls to want to implement any of these before the next provinical election — which is why Metrolinx is mandated to produce a report by June 1, 2013. In my opinion that it way too far off.

    Let the Mayoral candidates debate this and suggest what the City can do as a first priority of business for the new council. And the Ontario Government should be listening and implementing some of these tools regionally. We need to make a decision for the end of this year what new taxes we want to dedicate to transit and have them implemented by next year.

    I find it absurd, with the Pan Am games coming to Toronto in 2015, that non of these new lines will be up and running. Let’s implement these tools now and build the transit now so we don’t embarrass ourselves on the world stage.

    Steve: Actually, Sheppard East will be finished, and there’s a good chance it will be extended south to link with the UTSC site and Aquatics Centre.


  10. Sorry Steve, In my frustration I forgot about the one line that will be built, which is Sheppard.

    If our politicians had any vision, not only would the Sheppard line be built with tht extension to UTSC, but the Malvern line would be built, and the SRT would have a full conversion to LRT complete with an extension to at least the Sheppard line. With Eglinton and Finch well underway.

    I really hope that an effective mix of revenue tools can be selected and implemented because in my opinion we should have a goal of building all our LRT lines for Transit City in the next 10 years. I might put the DRL on that wish list, especially as I think it would be a better use of resources having the western link of such a line go out to the airport rather than Blue 22 or whatever they want to call it. However, I would have the DRL up and running before any extension of the YUS to Richmond Hill, and within a 15 year period.

    I’m still hoping Toronto can one day win a bid for a summer olympic games – we’re going to need a transit system for it and will need to prove we can move people around the city. 2020 would be the best year I think for such a bid as the last Summer games in NA would have been 24 years prior in Atlanta. If such a future is in the cards for Toronto we need to build all of this in the next 10 years but by the look of things the Pan Am games might be a dismal failure and our olympic hopes dashed.

    Steve: Toronto has a small industry of people who live off attempts to get megaprojects, but never actually have to deliver. And to think, we’re not even hosting all of the Games here.


  11. But now we have the whole issue potentially being muddied by proposals from some of the usual pathetic mayoral candidates that all but the local lines be handed over to Metrolynx. Fascinating! They pontificate over the details of Transit City and then, as if aware that they know nothing about the subject, they want to remove it from their own jurisdiction, should any one of them get elected.

    Steve: The ignorance of the mayoral candidates on transit issues is breathtaking. A few of them put far too much faith in the “Save Our Subways” crowd, and most of the rest seem to want to throw away whatever David Miller was anywhere near in the past decade. I’m looking forward to an all-candidates’ debate where I get to be on a panel, but even then probably won’t get a chance to correct them all.


  12. I want to add, that what I’m talking about is quite feasible. Taipei didn’t start building their transit system until 1986 and it opened 10 yrs later with almost 100km of rail. They are currently building 100km of rail and have another 100km or rail in the planning stages. Population of Taipei is 2.6 million and the 6.5 million in the greater metropolitan Taipei area.

    China is spending 1 trillion dollars nationwide by 2015 to increase transit. 100 Billion of this is being provided by the central government. Over 3000km of rail! Shanghai which has the worlds longest metro currently has about 417km and in 2015 it will be 854km.

    Toronto, on the other hand, only has 68km of rail. Now I know Toronto does not have population densities of megacities like Shanghai ect but I like to compare to Taipei, which Toronto does match up with. Our Transit City plans to build about 75km of LRT. It boggles my mind that it will take until 2030 approx to get all 75km built.

    More and more of the world’s population is moving into cities and this includes Canada’s population. Power, influence and prosperity are all going to come from cities that can exercise their competitive advantage.

    I agree what time and time again, focus on megaprojects has gone no further than ideas on paper and lines drawn on maps. Drastic changes are necessary to make up for the lack of building that has taken place the last couple of decades. The qualify of our lives and our prosperity depends on it.


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