The transit funding panel formed by Premier Kathleen Wynne has issued a report today recommending options to tackle increasing congestion and gridlock in the Greater Toronto and Hamilton Area (GTHA). While the report does its best not to call for controversial funding strategies, it lays out two options, both politically challenging, to achieve the dedicated transit funding the GTHA so desperately needs.
Below is a synopsis of the two options the report offers to the Provincial government.
The First Funding Option:
- Gasoline and Fuel Taxes: phased increase commencing with 3 cents per litre and adding 1 cent per litre per year up to 10 cents per litre
- Corporate Income Tax: modest increase of 0.5 per cent to the general rate
- Provincial Portion of Harmonized Sales Tax: redeployment of the GTHA portion of the provincial part of the HST charged on gasoline and fuel taxes.
This option is fraught with difficulties. It asks the Ministry of Finance to give up some of the HST it now collects and allocates to things like health and education. The Ministry of Finance is loath to dedicate any funds to particular projects as this contracts their ability to maneuver on the budget from year to year. The first option also places a .5 percent increase on corporate income tax. This will be difficult especially if it requires Federal support and given our history, Federal support of transit funding in the GTHA over the past 40 years is sporadic at best. The increase in the gas tax may be the only viable option but even that will have its detractors.
The Second Funding Option:
- Gasoline and Fuel Taxes: phased increase capping at 5 cents.
- Corporate Income Tax: modest increase of 0.5 per cent to the general rate
- A .5 per cent increase to HST
This second option is the easier of the two options. It doesn’t require tapping into funds already allocated by the Ministry of Finance, but will require real political leadership on increasing the HST by 0.5 per cent. It also calls for an increase to corporate income tax that will be a difficult if there is a need for Federal agreement.
The final transit panel report is a good attempt at moving the conversation on dedicated transit funding forward. It won’t be easy but it is the right, reasonable and responsible approach to moving the region forward, together.
You can read the full transit panel report here.
