Comment 36259

By Ted Mitchell (registered) | Posted December 12, 2009 at 18:43:23

Andrew, check out the related blog:

http://www.raisethehammer.org/blog/1595/...

and the links showing that drivers clearly do not pay their fair share, despite all the taxes you mention:

http://www.tc.gc.ca/policy/report/aca/fu...

comparing the high estimate of any remotely road related revenues $17.2B, of which $10.2B is gas tax, with the high estimate of road costs $25.8B, you see a clear shortfall which comes out of fixed revenue sources, primarily income tax.

And gasoline is not 50% tax, it's 35%: http://www.caa.ca/mini%20sites/gasprice/... http://www.ontariogasprices.com/can_tax_...

Doing a little math, 25.8-10.2 = $15.6 billion is the shortfall for gas tax covering road costs (this still ignores costly externalities like road trauma, air quality health effects, congestion, etc).

So @ $1/L, $0.35 tax makes up 10.2/25.8 = 40% of what it should cost if gas taxes paid their fair share. Based on that, the revenue neutral gas tax should be $0.89/ L. Similar to Europe. When $1 gas becomes $1.54 through taxation, then Andrew will be almost correct with his statement:

Drivers pay their fair share already.

Until then, we're subsidizing cars, not transit. And I could make a good argument, given more space, for a adding another $1/L in tax (revenue neutral) as a way of funding transit, shifting demand to transit, covering health costs, and improving economic efficiency through increased density and avoiding congestion. I'd be happy happy to pay this much to avoid stop and go traffic forever, and so would a lot of other people. Traffic fatalities would decrease. Then there's the quality of life argument which is priceless.

The point is that the way we use cars is really expensive and inefficient. At 25% seat occupancy, which is what we have in GTA commuters, that's 3 out of 4 seats driving around empty. Unforgivably wasteful.

So the true current situation is not:

  1. The government should not create a false market where they manipulate the cost of >driving to drive the use of transit,

it is that the government has ALREADY created a false economy by manipulating the cost of driving to be paid largely through fixed taxes, so it encourages overuse to get your money's worth with predictable congestion. And by subsidizing cars this way it discourages transit.

Fixed insurance costs contribute similarly to this 'tragedy of the commons' problem, as does vehicle depreciation.

Oh, and:

Growth is not happening in the core anymore. People are moving out and around.

Duh! That's because we are subsidizing car culture! And people who move to the fringes of suburbia not only don't pay enough for gas, they are subsidized by inner city dwellers who have higher density and lower infrastructure maintenance costs.

When all externalities of car travel are paid for through gas taxes alone, then we can debate whether transit should pay for itself, or it is a public good that deserves some subsidy. Private vehicle use certainly does not.

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