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Why have Kathleen Wynne\u2019s Liberals suddenly started talking about capping tuition fee hikes (at 3%, down from 5%)<\/a> and auto insurance premiums<\/a>, the latter a long-standing demand by the NDP?<\/p>\n On its face, the government appears to be looking for a political d\u00e9tente with Andrea Horwath in the run up to this year\u2019s provincial budget, which, if defeated, would trigger a general election. But I\u2019m surmising that Wynne \u2014 who traded shots with Horwath this week about the new taxes required to fund regional transit in Greater Toronto \u2014 is playing the long game, and it\u2019s all about The Big Move.<\/p>\n Aware that she\u2019s facing a defining moment with the long-awaited June 1st release of Metrolinx\u2019s revenue tools recommendations, Wynne seems to be looking for ways to cut expenses for Ontarians in the run-up to a contentious debate over the adoption of measures that will effectively claw back those reductions. In other words, the government wants to be able to say to voters (and the opposition parties), “Hey, these new levies and taxes will be off-set by the cuts we\u2019ve already approved, so you won\u2019t end up falling further behind.” To use the hoary old political clich\u00e9, “revenue neutral.”<\/p>\n Horwath, meanwhile, is staking out an infuriatingly vague position, with her calls for a \u201cfair and balanced\u201d approach to raising revenues for transit, among them suggestions for a corporate tax hike.<\/p>\n This whole debate, which is getting warmer by the day, will take a new turn later Tuesday morning when Metrolinx reveals a short list of proposed revenue tools.<\/p>\n The long list \u2014 a 230-page report<\/a>, prepared by AECOM and KPMG that evaluates 25 revenue tools \u2014 was released with little fanfare two weeks ago, on the same day the Toronto Region Board of Trade announced its recommendations<\/a>.<\/p>\n While this report received scant public attention, it is a key document in the debate that will play out over the next two months and well worth reading for those who want to figure out how Metrolinx came up with its Oscar\u00a9 nominees.<\/p>\n Here\u2019s the trailer: AECOM\/KPMG assessed all 25 tools[i]<\/a> according to a series of 18 criteria grouped into seven broad categories: revenue potential, cost, overall impact on behaviour and network performance, technical implementation considerations, governance, equity and distributional impact, and economic efficiency. For each criteria (e.g., revenue sustainability), the consultants scored every tool on a scale of one to five (i.e., worst to best). The report has a table on page 225 that summarizes all these scores.<\/p>\n So for example, an increase in corporate income taxes rates a four for revenue potential (high), only two for time-savings, and five for \u201cvertical equity,\u201d which is the term the report uses to gauge how progressive each measure is.<\/p>\n The report also provides estimates on the short- and long-term annual revenue potential for each tool (e.g., $170 million to $310 million annual from a 0.5% increase in the corporate tax rate). And it includes some commentary on how each tool can be implemented, case studies from abroad as well as lessons for Metrolinx. I\u2019d say the agency got its money\u2019s worth, but this is still raw data.<\/p>\n According to John Howe, who is spearheading Metrolinx\u2019s investment strategy evaluation, the agency must now refine its analysis by asking questions such as these:<\/p>\n Metrolinx vice-president of communications Judy Pfeifer says the agency in the coming weeks will release two more reports. One will lay out a more precise statement of values, based on both the AECOM\/KPMG evaluation and the results of the feedback collected during Metrolinx\u2019s consultation sessions. The second will show how various levies or combinations of fees will impact household budgets.<\/p>\n This latter report, I fearlessly predict, will not only attract “above-the-fold”<\/a> and somewhat screechy media coverage, but also marks the moment when Metrolinx finally begins to attract the broad public engagement it claims it has been seeking.<\/p>\n While the AECOM\/KPMG report lacks a lot of crucial information, its scoring matrix does invite some back-of-the-envelope number-crunching. I decided to assess each revenue tool using two filters:<\/p>\n For (1), the following tools scored a 4 or 5 in the highest number of evaluation criteria: cordon charges, employer payroll tax, transit fare increases, fuel taxes, High Occupancy toll lanes (HOT), sales tax, highway tolls, and the vehicle kilometres travelled (VKT), which, Metrolinx officials admit, is not presently in use on a broad scale. Of those, just four \u2014 employer payroll tax, fuel tax, sales tax, and tolls \u2014 are deemed to be serious money makers.<\/p>\n For filter (2), the list from (1) grows to include carbon tax, land value capture, development charges, tax increment financing, parking sales tax, parking levy, corporate and general income tax, new vehicle sales tax, property tax, transportation utility levy, and the vehicle registration fee. (The acknowledged limitation of (2) is that the sum of the scores for individual criteria is an imprecise statistic because it doesn\u2019t reflect their relative weightings.)<\/p>\n If Horwath\u2019s advisors are tuning in, incidentally, the corporate income tax scores very well on equity and very poorly on economic impact. And contrary to her claims during last week\u2019s speech at the Board of Trade, neither development charges nor land value capture generate significant revenue (both scored just 2).<\/p>\n Using a much more granular analysis, Metrolinx will spend the next two months making a strong public policy case for the finalists that will be released today. This past Friday, agency officials insisted their recommendations wouldn\u2019t include any political hedging. Choosing a seasonal metaphor, Pfeifer said, \u201cOur stuff [will be] fully baked.\u201d Carving the turkey will fall to the politicians around the cabinet table.<\/p>\n [i]<\/a> Auto insurance tax, car rental fees, carbon tax, cordon tax, corporate income tax, development charges, driver\u2019s license tax, employer payroll tax, transit fare increases, fuel tax, HOT lanes, highway tolls, hotel and accommodation levy, income tax, land transfer tax, land value capture, new vehicle sales tax, parking sales tax, parking space levy, property tax, sales tax, tax increment financing, transportation utility levy, vehicle kilometre traveled fee (VKT), vehicle registration fee<\/em><\/p>\n photo by Danielle Scott<\/a><\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"\n
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<\/p>\nScoring the revenue tools<\/h2>\n
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