This spring, voters across the Lower Mainland will decide whether to support a new 0.5 per cent Metro Vancouver Congestion Improvement Tax, which will be tacked onto the PST. If the referendum passes, the new funding will go towards a $7.5-billion plan to improve transportation in the region, which includes a subway on the Broadway corridor, light rail in Surrey, a third Seabus, a new Pattullo Bridge, new bus lines and other upgrades across the region.
Professor Robin Lindsey, CN Chair in Transportation and International Logistics at UBC’s Sauder School of Business, says the plan and the tax are far from perfect, but may be better than the alternative: no transit expansion in a region growing by thousands of new residents every month.
Here he discusses the pros and cons of supporting Metro Vancouver’s upcoming referendum.
How should I vote?
People often react instinctively against a new tax – so two points are worth keeping in mind. The plan is unlikely to be the finest investment package that could be devised, and the congestion tax is not a theoretically ideal way to pay for it. Nevertheless, approving a reasonable investment-funding package may well be better than continuing the long stalemate on finding a long-term, sustainable means to fund transit in Metro Vancouver.
The other point is that it’s almost impossible to design a policy that benefits everyone. As an eminent economist remarked, if reasonably good projects are implemented on a consistent basis, and the distribution of winners and losers varies from project to project, almost everyone will be better off in the long run. That sounds like a worthy guiding principle for Metro Vancouver.
What happens if the referendum is defeated?
While similar referendums have been successful in the U.S., they often take years of planning and multiple attempts, so it’s difficult to predict how the vote will turn out here. The stakes are high since, as the chair of the Mayor’s Council Richard Walton has said, there is no Plan B.
If the referendum fails, could the plan still get funded? Extracting more money from existing sources is unlikely. According to existing legislation, property tax increases are capped at three per cent a year and transit fare increases are capped at two per cent. Revenues from TransLink’s fuel tax appear to have maxed out. TransLink has the legislative authority to levy a motor vehicle charge, but two attempts to introduce one were unsuccessful.
Finding alternative ways to fund two parts of the plan looks a bit more promising. Linda Hepner, the new mayor of Surrey, has promised light rail by 2018. She says if the referendum fails she’ll pursue a public-private partnership to start the project. And for the Pattullo Bridge replacement, the province has promised to cover part of the cost, and TransLink intends to toll the new bridge.
Is the sales tax a good way to fund transit?
Sales taxes have some strengths. They tend to yield predictable and sustainable revenues. The burden is widely shared among residents, and tourists also contribute when they buy goods and services in the region. The congestion tax is also transparent since the revenues are dedicated to the plan, so people know how the money will be spent.
One weakness of the tax is that it’s not directly linked to the use of transit or roads. Unlike transit fares or tolls, the tax does not satisfy the beneficiary principle which states that public services should be paid for by those who use them. The tax will also do nothing to encourage travel using transport modes, routes and times of day that are less congested and polluting.
Will the sales tax really reduce congestion?
While the tax itself won’t really affect congestion, the plan that it supports might affect travel in the region if people switch from driving to transit. That will depend on how much transit service is improved, and will vary across the region.
One view is that the plan will not reduce driving much, but will benefit transit users through more extensive, frequent and reliable service, and better connections.
Another view is that the plan will reduce congestion over the long term as people gradually adapt by owning fewer vehicles, and relocating closer to improved transit routes where they can rely on transit for a larger fraction of their trips.