Canadian Manufacturing

Billions in new taxes and tolls on the table to pay for transit

A new payroll tax, a "land value capture" and a fee for every kilometres traveled are all on the list of ways for Ontario to pay for GTA public transit.

TORONTO—Everyone in Ontario could end up paying for public transit improvements, even those who don’t use the system, if proposals from provincial transportation agency Metrolinx take hold.

Premier Kathleen Wynne says building transit is necessary and new revenue streams are needed to pay for it. She also says she’s not afraid to go to an election and make transportation infrastructure a big part of her platform.

She says infrastructure means different things in different parts of the province, but in the greater Toronto and Hamilton area, it means building transit to help grow the provincial economy.

Metrolinx produced a short list Tuesday of 11 options to fund the expansion of public transit, which also include a hike in property taxes, a new payroll tax, parking levies and a half-cent-a-litre tax on gasoline.

The agency, which will make its final recommendations to the Ontario government by June, says the province should also consider a new charge for every kilometre a vehicle travels in the region and allowing drivers to pay to use high-occupancy vehicle lanes even if they have no passengers.

Metrolinx suggestions include:

  • Development Charges
  • Employer Payroll Tax
  • Gas Tax
  • High Occupancy Tolls
  • Highway Tolls
  • Land Value Capture
  • Parking Space Levy, including pay-for-parking at transit stations
  • Property Tax
  • Vehicle Kilometres-Travelled Fee
  • Sales Tax

All the revenues would be dedicated to public transit projects, with 25 per cent carved out for municipalities in the area to spend on local transit and transportation projects, the agency said.

About $2 billion a year is needed to fund public transit improvements in the area, said Metrolinx CEO Bruce McCuaig. Not only will it reduce congestion, it will improve productivity and economic competitiveness.

The proposed measures may be politically toxic to the minority Liberals and their rivals, but Ontario can’t afford to wait any longer, he said. People want action and governments must respond.

Wynne said people are willing to pay more to build transit, but it really depends on how you ask the question.

Municipalities outside the region aren’t exactly thrilled with the idea of paying for Toronto-area transit projects either, according to Allan O’Dette, president and CEO of the Ontario Chamber of Commerce, who senses “concern” between the 416 and 905 areas about who pays.

“This is drawing closer to the June deadline, and people are awake and they want to know what’s going on, how will this impact me,” O’Dette said.

But improving infrastructure in the Toronto area will benefit everyone, he added.

Transportation Minister Glen Murray said the government will wait for Metrolinx’s final report before making any decisions about raising taxes or levies.

Although the federal government administers the harmonized sales tax, there is the possibility of collecting a regional sales tax, rather than spreading out the tax burden across the province, he said.

Opposition Leader Tim Hudak left the door open to new tolls, taxes or levies if the Progressive Conservatives form the next government.

According to Metrolinx, the options that would bring in the most money are hiking the sales tax, highway tolls, parking levies—including GO Transit stations—and a toll charged to motorists for every kilometre driven.

Each one would bring in at least $1.4 billion a year, the agency estimates.

No matter what measures are implemented—whether it be road tolls or a new tax—they will likely be permanent, though they may need to be re-calibrated periodically, said McCuaig.

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