A government-appointed advisory panel is recommending either a gas tax or a raise in HST to help fund public transit expansion in the Toronto-Hamilton area.
A 13-member panel chaired by Ryerson University's Anne Golden – tasked with ways to raise $2 billion a year –suggests two revenue tools in its recommendations, presented this morning to Premier Kathleen Wynne at Queen's Park.
Golden offered two options to raise the money.
Option 1: A five-cent-per-litre increase to the existing gas tax, which would increase the gas tax to 19.7 cents-per-litre from 14.7 cents. This would pair with an increase to the harmonized sales tax of 0.5 per cent.
Option 2: A three-cent-per-litre increase in gas tax going up to 10 cents in eight years. That would bring gas taxes to 24.7 cents, up from the 14.7 cents per litre it currently is. In addition, the corporate tax rate would increase 0.5 per cent.
The report recommends the HST could rise provincewide but only GTA money would be used to fund GTA transit.
The panel says a gas tax increase would cost the average family $80 a year and $260 over eight years, and would raise $1.7-1.8 billion annually. The report ultimately calls for $80 million raised through HST and the increase to gas tax be directed to transit projects.
Golden said panel members unanimously endorsed all 20 recommendations in the report.
“There is absolutely no evidence that transit can be funded by efficiencies and savings alone,” said Golden.
The panel further said road tolls are a good idea, but would take long time to implement and the technology to operate them is expensive. But she sees tolls as the next phase in transit funding.
The panel also recommends using money raised from tax increases as collateral to borrow against for future projects. She said California undertook this same measure with success.
In terms of other options, Golden reported parking levies are too complicated to implement because of regional issues and lease agreements.
But she insisted the gas tax increase makes sense. “If the media does the math, people will get it,” she said. She called her research a “pro-driver report.”
Ontario currently imposes a 14.7-cent-per-litre levy on unleaded gasoline, which hasn't changed in more than 20 years.
The report also recommends a dedicated trust fund be set up so drivers know the extra tax they are paying can be used only for public transit improvements.
Golden appeared on CBC Radio's Metro Morning on Thursday and said the report makes clear that every nickel raised by the new revenue tools must be spent on entirely on transit.
"We're saying dedicate it or forget it," Golden told host Matt Galloway.
'A balanced approach'
"The benefits of building the network we need far outweighs what we're asking people to contribute," she said. "We looked at a lot of the revenue tools. It's a fair and balanced approached that asks for a little from all stakeholders.
"It's a call to action and a warning that failing to act has consequences too."
Studies have shown that people in the Toronto-Hamilton area spend more than an hour a day commuting, and predict that will jump to 109 minutes a day by 2031 if nothing is done.
The Ontario Chamber of Commerce has estimated that traffic congestion costs the region $6 billion a year in productivity.