$2.5b Toronto transit funding strategy would rely on range of taxes, not tolls, congestion charges

Metro Toronto’s upcoming $2.5 billion transit investment program could be financed by a range of funding sources, says a new CCPA study, and generate a huge benefit to lower-income families in the process.

Public transit is such a boon to lower income commuters that regressive funding measures, like sales tax, are offset by the reductions in income equality, the study says. But corporate income tax can help as well.

The new review by economist Hugh Mackenzie provides a refreshingly practical approach to the political challenges of transit funding that bears consideration here in Metro Vancouver. Mackenzie turns away from property taxes, congestion charges, vehicle levies and area benefitting taxes, always perennial funding favourites with transit policy wonks, but often killers among voters.

Fare increases are also ruled out given the 70 percent share of Toronto transit revenue that already comes out of the fare box.

But Mackenzie says modest sales tax increases, fuel taxes and corporate income tax hikes — Toronto has a very low rate, as does Metro Vancouver — could produce enough revenue to maintain existing services, build new ones and reduce congestion.

A similar approach could help fund Metro Vancouver’s needs — and might pass in the referendum the new government says may be required.