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Study urges a range of new municipal taxes to pay for road, transit systems

TORONTO, Ont. -- An alliance composed of management and labour groups in the construction industry has released a s...


TORONTO, Ont. — An alliance composed of management and labour groups in the construction industry has released a study urging a range of new municipal taxes including road tolls and fuel taxes in order to fund road and public transit systems, reduce traffic congestion and cut greenhouse gas emissions. The study, commissioned by the Residential and Civil Construction Alliance of Ontario (RCCAO) and authored by Trent University economics professor Harry Kitchen, was released yesterday.

The study says local governments in the Greater Toronto Area including Hamilton (GTAH) should be allowed to adopt these new taxes to ensure the well-being of region’s infrastructure.

The groups says municipality’s current revenue sources most notably property taxes and user fees are no longer sufficient to fund the massive operating and capital requirements of public transit and roads.

“Much of this infrastructure was built years ago and is nearing the end of its life span. Billions of dollars, perhaps tens of billions, will be required to ensure that the GTAH has the public transit and transportation systems critical to remaining competitive,” Kitchen said at a news conference at Queen’s Park.

“Not only would it be politically difficult to raise property taxes to levels that would generate the needed revenue, but property taxes also do nothing to change people’s behaviour when it comes to road and transit use,” RCCAO reps said in a release. “Specific transportation charges, on the other hand, can be designed to provide an incentive for people to make efficient decisions about how they use the services, where they should live, and where they should work.”

According to the study, the best instrument for reducing gridlock in the GTAH would be the implementation of area-wide road tolls. It has been estimated that a toll of seven cents per kilometre on the 400 series highways in the GTAH would produce $700 million in revenue annually.

Road tolls have been successful in a number of cities (Singapore, Stockholm, London, UK) in reducing congestion and travel times, lowering emissions, and increasing transit use, according to RCCAO officials. Although the study cautions that there will be resistance to road tolls, public support will be higher if these revenues are earmarked for transportation and public transit purposes.

The study suggests that tolls could be designed so that they are higher for vehicles that cause relatively more road damage, travel longer distances, travel in peak-demand hours, and/or produce higher emissions, meaning longhaul truck drivers would likely experience the highest tolls.

The study recommends that road tolls be applied on a region-wide basis on the major 400 series highways, the Queen Elizabeth Way, the Don Valley Parkway, the Gardiner Expressway, the Red Hill Creek and Lincoln Alexander Parkways. Other major arterial highways could also be included if they were deemed appropriate.

As for a GTAH-wide fuel tax, set by a governing body and piggybacked onto the provincial fuel tax, the study indicates that this would be a relatively inexpensive and simple plan to administer. It has been estimated that a charge of 6 cents per litre would generate new revenue of between $300 million and $420 million per year.

“A municipal fuel tax is a blunter instrument than road tolls for controlling individual behaviour but it is almost certain to have an impact as commuters are likely to drive less if gas prices rise,” Kitchen noted.

Currently in a few jurisdictions in Canada, fuel tax revenues are shared between the province and the city or region. The Greater Vancouver Transit Authority (TransLink) receives 12 cents per litre from B.C., and 2.5 cents per litre is remitted to the transit system in the Victoria region. Calgary and Edmonton receive provincial grants for transportation infrastructure that are estimated at 5 cents per litre. Agence Mtropolitaine de Transport, which provides transit services to Montreal and surrounding municipalities, receives 1.5 cents per litre.

Other initiatives suggested by the study include non-residential parking space taxes and motor vehicle registration fees.

The study comes on the heels of a recent report by the National Surface Transportation Policy and Revenue Study Commission in the US, which calls for the increase of fuel taxes by as much as 40 cents per gallon to pay for infrastructure improvements. The report says that an annual investment of $225 billion is necessary over the next 50 years to update the current system to a state of good repair. Less than 40% of this total is currently being spent, according to the commission.

To read the full Canadian study visit www.rccao.com.


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