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How would you finance the Big Fix?

Find a solution to the infrastructure problems facing Canada's cities

Last Updated: November 18, 2011

Canadian governments have identified infrastructure spending as a priority. But a big gap remains between what the country needs and what the public sector can afford.

So the question is: Who pays? And how do they do it?

This tool puts you in charge of finding the answers.

The goal is to shrink the municipal infrastructure gap to zero dollars, without running a surplus.

Adjust the sliders on the left side to raise new revenues. Use the sliders on the right to defer some expenses to a later date.

Rules of the game:

  • This calculator assumes governments are unable or unwilling to run up deficits for infrastructure spending.
  • All figures are in current dollars.
  • The "infrastructure gap" covers municipal needs over a 20-year period. Annual revenue increases are multiplied by 20 to cover this time frame.
  • Calculating revenue generation is extremely complex, so we have used the best available data to make rough estimates in some cases.

Get started

Reset

$238,600,000,000

Extra revenues raised

$000,000,000,000

Spending needed

$000,000,000,000
Notes
The Federation of Canadian Municipalities estimated in 2007 that our cities need $123 billion over the next 20 years to fix existing infrastructure. An additional $115 billion is needed over that time period to meet changing demographic, socio-economic and environmental conditions. Increased government spending on infrastructure over the past four years has largely prevented this number from rising, so these figures remain roughly the same today.

Select "Show Controls" to see all the revenue options for each level of government. Adjust the sliders to change the revenue levels.



 

Federal only

The federal government has some ways of increasing its infrastructure budget, from sales tax hikes to reallocation of existing spending. Ottawa currently spends roughly 1.5 per cent of its budget on municipal infrastructure.

400,000,000
cent
1 cent/litre = $8 billion/20 years

Notes

The federal share of the gas tax is currently 10 cents per litre, which brings in roughly $4 billion in revenue per year.

So if you were to raise the gas tax by one cent and dedicate all the new revenues to infrastructure, that would theoretically mean an extra $400 million annually, or $8 billion over the 20 years needed to fix the infrastructure deficit.

Note: Ottawa has previously announced $2 billion in permanent annual funding for municipal infrastructure from its share of the gas tax.

Also keep in mind the existing frustration drivers have over high gas prices and that any gas tax increase may face political resistance.

6,000,000,000
%
0.1% increase = $11.36 billion/20 years

Notes

For each one per cent of the federal GST/HST collected in the last fiscal year, roughly $5.68 billion in revenue was raised. So, in theory, each 0.1 per cent increase would raise $568 million annually, or $11.36 billion over the 20 years needed to fix the infrastructure gap.

Adjust the slider if you want to increase this tax and use the proceeds for infrastructure.

Keep in mind possible political resistance to higher consumer taxes. However, some evidence suggests Canadians may be willing to accept a GST hike if the funds go towards infrastructure.

%
0.25% increase = $5.675 billion/20 years

Notes

The federal government collected $113.457 billion in personal income taxes in fiscal 2010/11.

So if you were to increase the entire amount of federal income tax collected by one per cent, that would, in theory, raise an extra $1.135 billion annually. For each 0.25 per cent increase, that would be an extra $5.675 billion over the 20 years needed to fix the infrastructure gap.

Note: This doesn't mean a one per cent tax increase across the board. You could tax all incomes equally, or shift more of the burden to higher-income households.

Keep in mind that raising taxes on individuals could be deeply unpopular.

%
0.25% increase = $8.325 billion/20 years

Notes

The federal corporate tax rate in Canada, as of January 1, 2012, will be 15 per cent.

Each increase of one per cent in the Canadian corporate tax rate raises $1.664 billion in revenue, according to rough calculations using 2010 figures.

So each 0.25 per cent increase in the corporate tax rate would, in theory, raise $8.325 billion over the 20 years needed to fix the infrastructure gap.

Keep in mind that while raising corporate taxes may appeal to a segment of the Canadian population, some experts argue that raising corporate taxes will hurt Canada's international competitiveness and job creation.

%
0.25% increase = $12 billion/20 years

Notes

The federal government spent $239.6 billion total in 2010/11, exclusive of debt charges. If the government were to cut one per cent of its total budget and reapply that money to infrastructure, that would be the equivalent of a $2.396-billion annual investment.

So each 0.25 per cent increase would, in theory, raise an extra $12 billion over the 20 years needed to fix the infrastructure gap.

Keep in mind that this approach would mean reshifting priorities — and likely involve cuts to other departments and/or Crown Corporations.


 

Provincial only

Provincial and territorial governments have some ways of increasing their infrastructure budgets, from income tax hikes to new vehicle levies. In total, they currently spend roughly two per cent of their total budgets on municipal infrastructure.

%
0.25% increase = $4.51 billion/20 years

Notes

Provinces raised $90.2 billion in income-related taxes in 2010/11, according to Statistics Canada. If the provinces were to introduce tax hikes equivalent to an extra one per cent of revenue, that would theoretically generate $902 million annually. And, over the 20 years needed to fix the infrastructure deficit, each 0.25 per cent hike would raise an extra $4.51 billion over the 20 years needed to fix the infrastructure deficit.

Note: This doesn't mean a one per cent tax increase across the board. You could tax all incomes equally, or shift more of the burden to higher-income households.

Keep in mind that raising taxes on individuals could be deeply unpopular.

$
$20 annual fee = $8 billion/20 years

Notes

This country has roughly 20 million registered personal vehicles, according to Statistics Canada. If the provinces and territories were to impose a $100 levy on each vehicle when it was registered, that would raise roughly $2 billion annually.

So for every $20 raised, that would raise $8 billion over the 20 years needed to fix the infrastructure gap.

Keep in mind that vehicle registration can be politically risky. Toronto city council overturned a vehicle registration fee in late 2010.

%
0.1% increase = $568 million/year

Notes

If each province and territory were to implement a special one per cent tax on all items that are currently charged GST/HST, that would raise roughly $5.68 billion per year in new revenues. (This would include Alberta, which currently does not have a sales tax.) This could be done by provinces alone, by municipalities alone, or in tandem.

Keep in mind that tax hikes are never popular, although the idea has its supporters in some municipalities — on the condition the proceeds be used exclusively for infrastructure.

%
0.25% increase = $17.519 billion/20 years

Notes

The provincial and territorial governments, as a whole, spent $350.38 billion total in 2010/11, exclusive of debt charges. If all of these governments were to cut one per cent of their budgets and reapply it to infrastructure spending, it would theoretically generate $3.5038 billion per year.

So for each 0.25 per cent increase, that would mean an extra $17.519 billion over the 20 years needed to fix the infrastructure gap.

Keep in mind that this approach would mean reshifting priorities — and would likely involve cuts to other departments and/or Crown Corporations.


 

Municipal only

Local governments also some ways of increasing their infrastructure budgets, from property taxes to special levies like a special sales tax. In total, they currently spend roughly 26 per cent of their total budgets on infrastructure.

500,000,000
%
0.25% increase = $2.54 billion/20 years

Notes

Local governments across Canada raised $50.8 billion in property taxes in 2010/2011, according to Statistics Canada. If all Canadian municipalities were to introduce tax hikes equivalent to an extra one per cent of revenue, that would generate $508 million annually across the country.

Note: This doesn't mean each household would face a one per cent hike in their rates. The tax hikes would increase the entire pool by one per cent.

Keep in mind that Canada already has the second-highest property tax rates among OECD nations, so the ability to raise property taxes may be limited.

%
0.1% increase = $11.36 billion/20 years

Notes

If every municipality were to implement a special one per cent tax on all items that are currently charged GST/HST, that would raise roughly $5.68 billion per year in new revenues. This could be done by provinces alone, by municipalities alone, or in tandem. This could be a blanket sales tax of one per cent on all goods, or could be involve a more complex combination of other options, including hotel taxes, luxury taxes (on items such as alcohol), and so on. Keep in mind that tax hikes are never popular, although the one-per-cent idea has its supporters in some municipalities — on the condition the proceeds be used exclusively for infrastructure.

Keep in mind that tax hikes are never popular, although the idea has its supporters in some municipalities — on the condition the proceeds be used exclusively for infrastructure.

%
0.25% increase = $320.105 million/year

Notes

Local governments, as a whole, spent $128.042 billion total in 2010/11, according to Statistics Canada.

If all of these governments were to cut one per cent of their total budgets and reapply that to infrastructure spending, that translate to a $1.28042-billion annual investment. So each 0.25 per cent increase would mean, in theory, an extra $6.4 billion over the 20 years needed to fix the infrastructure gap.

Keep in mind that this approach would mean reshifting priorities — and would likely involve cuts to other departments and services.


 

Multiple levels

Some revenue-raising methods, such as private-public partnerships or road tolls, can fall under multiple levels of government.

Maximum savings = $6.2 billion over 20 years

Notes

In the private-public partnership (P3) model, governments and industry work together on infrastructure projects. Even those in the industry say only a fraction of all infrastructure projects — up to 20 per cent — are suitable to be P3s.

According to a 2010 Conference Board of Canada survey, projects that went through a P3 procurement process had an average projected cost savings of approximately 13 per cent. The savings ranged from 0.8 per cent to 62 per cent of the total project budget.

(Some critics attack these findings and say the savings from P3 projects are minimal or non-existent. This savings estimate also does not take into account the final cost of a project and any final cost overruns.)

So if all suitable projects were done on a P3 model — and the cost savings were all maximized and realized — the maximum savings would be $6.2 billion on about $47 billion worth of suitable projects over 20 years.

$
$1 per month = $2.976 billion/20 years

Notes

Some have proposed the idea of levying a fee on each household's utilities to pay for additional infrastructure needs.

Canada has 12.4 million households, according to Statistics Canada. So if each household were charged the equivalent of $1 per month — and all proceeds went to infrastructure — that would theoretically raise an estimated $148.8 million annually.

Keep in mind that the idea of additional levies on already rising utility bills could be deeply unpopular.

Max. $20 billion over 20 years

Notes

Estimates vary widely on how much revenue tolls and road fees could generate. Based on the best-available research on scenarios for Toronto, Vancouver, Montreal and Calgary, one estimate is that a maximum of $1 billion in net revenues could potentially be raised in net revenue for tolls, congestion fees and other user-pay measures.

Keep in mind that tolls are a politically sensitive issue, although there appears to be some support for the idea among voters.



Select "Show Controls" to see all the revenue options for each level of government. Adjust the sliders to change the expenditure levels



 

Mandatory fixes

According to the Federation of Canadian Municipalities, $123 billion is needed over the next 20 years to fix the country's existing municipal infrastructure and ensure our existing quality of life and economic competitiveness. To solve the infrastructure problem, none of these can be deferred to a later date.




Notes

This includes:

  • Water treatment and supply/distribution systems (water pipes, mains, treatment plants, pumping stations, etc.) .
  • Sanitary and storm sewers plus related treatment facilities (sewage pipes, stormwater systems, treatment plants, etc.).
  • Canada's water supply infrastructure had an average age of 14.8 years, or 40 per cent of its average life expectancy, according to 2007 figures from Statistics Canada. Wastewater and stormwater systems were at 63 per cent of their useful lives.

Notes

This includes:

  • Landfills.
  • Municipal recycling facilities.
  • Hazardous waste disposal/storage/recycling facilities.

Notes

This includes:

  • Paved and unpaved roads.
  • Sidewalks and curbs.
  • Bike paths.
  • Bridges .
  • Overpasses.
  • Road cleaning and snow removal equipment and facilities.

Canada's roads and highways had an average age of 14.9 years, or 53 per cent of their life expectancies, according to 2007 figures from Statistics Canada. Bridges and overpasses had reached 57 per cent of their life expectancies.


Notes

This includes:

  • Light rail, subways and other transit systems, including: tracks, stations, vehicles, service stations and parking facilities.
  • Buses and trams and related service and support facilities.

Notes

This includes:

  • Government buildings.
  • Public housing.
  • Public buildings.
  • Multi-purpose complexes.
  • Indoor and outdoor recreation facilities.
  • Parks and playgrounds.

 

Expansion needs

1 tick = 10%
1 tick = 10%
1 tick = 10%
1 tick = 10%
1 tick = 10%
1 tick = 10%

 

Your current status

  •  
    Progress to Goal
  • Amount Deferred

 

How did you do it?

  • Tax increases
  • User fees
  • Reallocation
  • Partnerships

 

Which governments are paying?

  • Federal
  • Provincial
  • Municipal
  • Multiple Levels

 

Rules of the game:

The goal is to shrink the infrastructure gap to zero dollars.

This calculator assumes governments are unable or unwilling to run up deficits for infrastructure spending.

Adjust the sliders to increase revenues and defer expenses.

All figures are in current dollars, since inflation would affect both revenues and expenditures.

The "infrastructure gap" covers municipal needs over a 20-year period. Annual revenue increases are multiplied by 20 to cover this time frame.

Calculating revenue generation is extremely complex, so we have used the best available estimates.



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