Federal Budget Introduces Transit Tax Credit

Crossposted to Transit Toronto.

The first budget of the newly-elected Conservative government, introduced yesterday, contained enough spending measures and promises to fix the so-called fiscal imbalance that it secured the support of the Bloc Quebecois and will likely pass. Among the measures is a tax credit, allowing commuters to claim back up to 15.5% back on any monthly pass purchase. This applies to all transit agencies nationwide, including the TTC and GO Transit.

The Star has more details. For TTC users purchasing a $99.75 monthly pass, it’s like receiving $15.46 cash back per Metropass at the end of the year. Students and seniors are entitled to the same tax credit for their Metropasses, although critics have noted that a number of students don’t pay taxes anyway, and won’t receive the benefit.

Although this does not increase funding to the TTC and GO Transit, transit activist Steve Munro notes that this significantly lowers the break-even point where purchasing monthly passes makes sense; in the case of the TTC, the cost of a Metropass has been reduced from 47.5 full adult fares to 40 fares. The fact that this could increase ridership while netting the TTC no money to service that ridership has been criticized by councillors like Joe Mihevc, who suggests that under the tax credit, the TTC could consider raising the cost of the Metropass to try and put some of that money into new buses (this idea has since been set aside).

The tax credit only applies to monthly passes, not day passes, weekly passes, tokens or cash fares — which is probably something of a relief to ticket takers, saving them from having to issue a receipt every time somebody drops a toonie into the farebox.

The federal government also promised $1.3 billion in support of public transit infrastructure, including $505 million to Ontario which will likely be used to fund the Spadina subway’s extension to Jane and Highway 7 in Vaughan. The previous government’s pledges to transfer portions of the gas tax to municipalies over the next four years were also maintained. All told, this was enough to lead Michael Roschlau, president of the Canadian Urban Transit Association, to claim that this was good budget for public transit.

12 comments

  1. Does anyone know if this tax break applies to students who are buying discounted adult passes from their university, through a deal with the TTC?

    That might sound greedy, but the tax is a measure taken to encourage frequent and faithful transit use, and since I meet those qualifications, it ought to mean that I qualify for the credit. Right?

  2. Yes, all monthly passes are eligible, including those bought at discount by students and seniors. You get a 15.5% credit on what you paid for the pass. Just be sure to ask for a receipt.

  3. I worry that this tax credit encourages ridership, but doesn’t give the TTC the funding required to maintain the system. Hence, even more people will try to pack into crowded buses and subways, get fed up with the discomfort, and soon swear off transit for good and get back into their cars.

    I don’t consider that a good thing for public transit.

  4. If you encourage public transit use without providing funding to support increased ridership and this is a bad thing, then why does the TTC do any encouraging of its own – advertising, various passes, volume discounts, “The Better Way” etc?

  5. Umm… I’ll admit to not being the sharpest crayon in the box, but doesn’t encouraging ridership in itself increase funding to the TTC? You know, more people paying fares and stuff? Couldn’t the increased revenue from more people paying to use the system go to buying buses? Am I way off the mark?

  6. It’s hard to say. If every new rider put in a cash fare in the farebox, then revenues would increase. However, it’s likely that most new users of the Metropass wouldn’t be new riders, but riders who are already paying by token and cash fare. Their use of the TTC would increase (increasing costs), but they would be taking more “free” rides, which is a cost drain.

    There may be a revenue increase if token users who ride 40-47 times a month decide to switch to a Metropass thanks to the break-even point being lowered, but if their use of the TTC increases significantly above 47 rides, the TTC starts losing money on the deal, so it probably balances out in the end.

    This measure could increase the number of rides on the TTC without increasing the number of paid rides, which increases the demand for service, without providing revenues to handle those demands.

  7. So anything that does not result in a full fare paid by a rider is a bad thing. Again, I ask why the TTC does what it does then? I certainly hope you are paying for a less than 47 use Metropass or are paying $2.75 per ride.

  8. It’s not that it’s a bad thing. I mean, companies similarly take a hit on loyalty programs, but it’s still done, and there is a benefit to be had in the TTC getting nearly $100 at the beginning of the month for rides which are taken afterward.

    But I would wish to make it clear that while this is a nice gesture to transit users, this is not a measure that will get more buses or streetcars on the streets. That takes tax dollars. The problem is that with the TTC operating near capacity, particularly during rush hours, new Metropass users might not find space available for them on the buses, streetcars and subways.

  9. Total bummer that weekly passes are not included. I commute by transit to Mississauga every day and buy a GTA pass which ends up costing me $172.00 a month. While I know this is far less than I would pay to maintain and feed a car (not to mention insurance) it sure would be nice to be included in tax credits or what-have-you.

  10. With regards to increased ridership vs no increased income, I disagree with the over all argument.

    Firstly, I am in the 40 token a month category. I moved out to Oakville for a couple of months last year and took the GO. I was astonished to find out that while on the TTC, you get screwed for purchasing in bulk (aka a metropass) where on the GO you get rewarded for purchasing a monthly pass. On the TTC I would be wasting about $20 a month by buying a Metropass whereas on the GO I would be saving $20 a month by buying a monthly pass. Thanks for appreciating my customer loyalty TTC!

    I highly doubt that the tax credit will make very many new riders switch to the TTC. Instead what it will do is turn the thousands of token buyiers into metropass buyers increasing revenues by $20 per month per rider!

    As for us token to pass converters, will we use the system more? Maybe, but not during rush hour. If I’m like most token users, I ride to and from work. Period. I can see myself using a metropass to scoot uptown at lunch on an errand or perhaps to stop off someplace on the way home or to jump out, pick something up, and jump back on again…ONCE IN A WHILE. I won’t suddenly start riding on a bus or train during rush hour that I’m not already riding on and now the TTC will be getting an extra $20 a month from me, even if I’m getting it back later elsewhere.

    And what about the poor who can’t afford to buy a pass? My answer to that is “So?”. Why do we feel that we have to make a solution that helps everyone? With this sort of attitude we end up not helping anyone because we can’t help everyone.

    There are a few things I would suggest to the program:

    1. Ensure that PARENTS get the tax credit for purchasing their kids passes. My 14 year old won’t be buying a pass himself for at least a year until he can work so do I get screwed for purchasing the pass for him?

    2. Ensure that all “receiptable” (to make a word) passes are eligable. In otherwords if you can get a receipt for purchasing your pass (weekly, monthly or other) then you should be able to submit those on your taxes.

  11. That’s great news for ridership, but I just wonder why it couldn’t include every single fare.

    If the worry is about having to provide receipts for every ticket, why are we using manual labour for ticket sales?

    Just about every other city I’ve ever been to, that has a transit system, uses automated ticket sales of one kind or another. I am still shocked that the TTC employs ticket booth attendants. Sure there could still be one at every station, but the rest could be automated, reducing labour costs, and reducing stress on the Ticket Salesman, who’s time could be better spent assisting people with directions.

    The TTC needs to modernize its sales method.

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