One option that was not discussed in the CivicAction report on transit funding for the GTHA, but which I suspect will end up being part of the discussion, is a surcharge on transit fares dedicated to building new transit infrastructure.
This option is likely to come up if one of the primary revenue generators targets drivers (parking levy, gas tax, tolls). While new transit benefits drivers indirectly by reducing congestion, it benefits transit riders directly by improving their experience, speed and options. If drivers are paying, the logic goes, why shouldn’t transit riders also contribute?
The CivicAction report (PDF) did propose two funding tools that would indirectly charge property owners or businesses who benefit from transit (Value Capture Levy, Local Payroll Tax), but these are obscure and complicated to implement (they’ll be touched on tomorrow). A transit fare surcharge is clear and direct.
A 10-cent/fare surcharge in Toronto raises about $30 million a year (depending on the details). Given the much lower transit use in the rest of the GTHA, a region-wide surcharge would probably raise $45 million/year at most, likely less.
This amount would be a drop in the bucket compared to the costs Metrolinx is facing. A surcharge might be useful as a local charge to help pay for local capital costs of TTC expansion that are not part of Metrolinx’s plans, if implemented at the same time as Metrolinx region-wide charges on drivers.
Cost to implement
A surcharge would be simple to implement — the collection system is already in place.
A transit fare hike would serve to discourage transit use, which is the opposite of the goals of the Metrolinx plan. It would be a behaviour dis-incentive.
However, in recent years 10-cent fare hikes have not reduced transit use, in part because the price of gas is also going up. So if the surcharge was implemented in combination with charges that increase the cost of driving, the result could be neutral.
Rating: Good, if …
A transit surcharge is only politically viable if drivers are also paying for transit infrastructure through a gas tax, parking levy or tolls.
A transit fare surcharge would negatively affect many low-income people who rely on transit, which would create opposition. The level of opposition would increase along with the size of the proposed surcharge.
On the other hand, transit riders would benefit directly from the result of the charge. If transit riders know that drivers are also contributing more than they used to, they are more likely to be accepting of the charge.
The most likely political purpose of a transit surcharge would be to encourage drivers to be more willing to accept a driver-targeted revenue tool (“everyone is chipping in, transit riders are contributing too”).
What do our readers think of this option? Are there other issues, positive or negative, with a transit surcharge?
Tomorrow: smaller revenue tools
photo by Brendan Johnson