Final report on public transit funding in Ontario calls for gas, HST hikes

A map of Metrolinx 15-year-plan for the Regional Rapid Transit and Highway Network, a part of the the massive transit expansion in the works in the GTA. (Metrolinx)

TORONTO _ Ontario's transportation agency is recommending a regional gas tax and sales tax increase estimated to cost an average family $477 a year to help fund public transit in the Greater Toronto and Hamilton area.

The five cent a litre gas tax and one percentage point hike in the HST are among four new fees Metrolinx is proposing in a report Monday to raise $2 billion a year for transit.

The others include a 25 cents per day business off-street parking levy and a 15 per cent increase in development charges.

Metrolinx says a regional increase in the HST to 14 per cent from the current 13 per cent would bring in $1.3 billion a year if applied only in the greater Toronto and Hamilton region.

But the report says that due to the administration and collection of HST at the federal and provincial levels, it may be necessary to increase the tax across Ontario. It says if that happens, revenue collected outside of the GTHA would be exclusively directed to priorities outside of the region.

The agency said while the gas tax and HST hikes would cost the average household in the region about $477 a year, that would increase to about $977 for a family of five with an above-average income and two cars driven a total of 40,000 kilometres a year.

Metrolinx president Rob Prichard says the agency realizes $477 a year is a lot, but he says that will be offset by the benefits of less congestion.

Metrolinx is also recommending other tools, such as paying for parking at GO Transit stations and allowing drivers to pay to use carpool lanes even if they have no passengers.

The transportation agency says all the revenues would be dedicated to public transit projects, with 25 per cent carved out for municipalities in the area to spend on local transit and transportation projects.

Premier Kathleen Wynne said her government will take the recommendations under advisement but action has to be taken.

``The congestion situation in the Greater Toronto and Hamilton area cannot be allowed to continue. And so it is absolutely critical that we have a dedicated revenue stream.''

But the Metrolinx proposals are just one part of the discussion and there are other possibilities to fund what's being called The Big Move, a 25-year plan to expand transit in the region.

The public will be consulted before any decisions are made, Wynne said. Legislation to implement the new fees will likely come in spring 2014.

``We'll be engaging with the people of the province about how we make sure we have a dedicated revenue stream particularly in the greater Toronto Hamilton region,'' she said.

But the minority Liberals need the support of at least one of the opposition parties. But both the New Democrats and Progressive Conservatives say they oppose any new levies.

The Pembina Institute, a clean energy think tank, calls the development of funding tools a crucial next step for transit expansion in the region.

``The reality is that municipalities can't finance a project on the scale of the Big Move, which requires $2 billion per year, from current revenue sources. Nor can the provincial government, given its current fiscal constraints,'' said the institute's Ontario policy director Cherise Burda in a statement.

``Without substantial investment in transit, the congestion in North America's fourth-largest city will only get worse as the region's population grows... It's no longer a question of `if' we need revenue tools. It's a question of how political leaders can work together to implement them in a fair and effective way.''