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THE ISSUE
Preserving clean air and fighting global warming are top priorities for Canadians. We must act decisively to reduce smog and greenhouse gas emissions.
Increased use of public transit is an essential part of the Conservative plan to reduce pollution, including emissions of carbon dioxide and other greenhouse gases. Public transit also helps to combat traffic congestion.
One way to promote increased transit ridership is through tax incentives. Canada’s Commissioner of the Environment and Sustainable Development recently endorsed the use of the tax system to encourage environmentally friendly behaviour:
“The tax system, by influencing the actions of Canadians, can have important direct and indirect impacts on the environment and sustainable development. As the department responsible for analysis and advice on the structure of the tax system, Finance Canada has the opportunity to influence sustainable development in Canada by better integrating the economy and the environment.”1
Groups such as the Canadian Urban Transit Association have specifically advocated the use of tax incentives to promote the use of public transit.2
The Liberals intend to spend billions of tax dollars to buy pollution credits from Russia and other foreign countries. Buying these credits does nothing to reduce our greenhouse gas emissions. Instead, it gives Canada the right to pollute more in exchange for sending billions of our tax dollars to Russian factories.3
Instead of the Liberals’ send-our-money-to-Russia policy, we need a “Made in Canada” clean-air plan that will increase transit ridership and reduce traffic congestion, smog and greenhouse gasses.
THE PLAN
A new Conservative government will immediately provide a 16 per cent federal tax credit on transit passes for travel on buses, light-rail and subways.
In other words, commuters will see their federal income tax reduced by 16 per cent of the amount they spend on public transit.
The tax credit will apply to all transit passes, whether annual, monthly or weekly, and also to other fare payment options (e.g., multi-ride passes, bulk ticket purchases). The only requirement is that the taxpayer must provide receipts for the purchase. Most commuters already have the option of purchasing transit passes; we will encourage all transit systems to offer this option as a means of encouraging regular ridership.
There is no upper limit to the amount of transit costs that may be claimed by Canadians and subject to the federal tax credit. (Receipts must be provided when tax returns are filed.) This is of particular benefit to commuters who must buy separate passes for two connecting transit systems (e.g. TTC and GO Transit in the Greater Toronto Area, or AMT and STM in Montreal).
The tax credit will apply to all transit users including students, seniors and children. Accessible services for persons with disabilities will be covered.
The policy will be family friendly: parents can claim the tax credit on behalf of dependent children.
The tax credit is non-refundable, meaning that it reduces federal income tax payable, but only to the extent that tax is owed. A family can choose to have one taxpayer claim the credit for the entire family’s transit use.
We estimate the total value of the credit to be $400 million annually. The credit will be funded from the $4.78 billion earmarked for climate change in Budget 2005. We will take money that the Liberals plan to use to buy pollution credits from foreign countries, and spend it on incentives to help Canadians make environmentally friendly decisions. We believe that taxpayers’ money is better spent on incentives for Canadians than on paying Russia and other foreign countries for the right to pollute.
By encouraging increased ridership, the plan will result in increased revenue for municipalities and local transit systems. The additional revenue will help them to meet rising maintenance costs, to diversify to alternate fuel vehicles, and to expand service.
The Conservative plan goes far beyond an earlier proposal, endorsed by the House of Commons in 1999, to exempt employer-funded transit passes from personal income tax.4 (The Liberals supported that proposal but in six years have done nothing to implement it.) The Conservative plan is much more far-reaching because it will benefit commuters who pay for their own passes.
Advantages
The Conservative plan to promote public transit use is preferable to the Liberals’ send-our-money-to-Russia policy because:
- It respects provincial and municipal jurisdiction over local affairs — the money goes to individuals directly from the federal government.
- It will help Canadians to make environmentally-friendly decisions about travel choices.
- It will help individuals to make a personal contribution to improve the environment by reducing congestion and pollution.
- It will increase fairness in our tax system because it helps to offset the untaxed advantages many employees receive in free parking at their workplace.
- It will generate additional revenue for local transit systems (through increased ridership), enhancing their capacity to improve services.
- It is preferable to buying pollution credits from Russia and other foreign countries — sending our tax dollars abroad — by implementing a “Made in Canada” solution.
Impact
Statistics show that if public transit is more affordable, then more people will choose to use it. The National Climate Change Secretariat has suggested that this policy could increase transit ridership by 25 to 50 per cent. The secretariat’s work was based on the American experience with tax deductible transit passes.
Student experience is also relevant when considering whether more affordable public transit will increase ridership. According to the Canadian Urban Transit Association, when B.C. Transit offered less expensive passes to students in Victoria, it saw student ridership increase by 50 per cent over three years.
In London, a similar program offered to students at the University of Western Ontario and Fanshawe College precipitated an overall system ridership increase of 26 per cent in three years.
Transit Facts
- About 2.3 million Canadians aged 55 and over rely on public transit for activities like running errands, visiting friends and getting to medical appointments.
- The average urban Canadian takes 75 transit trips a year.
- In 2001, 15 per cent of commuters across Canada used transit systems.
- In cities such as Calgary and Winnipeg, between 60 and 75 per cent of adults used public transit at least once per year.
- More than 200,000 Canadians are registered users of specialized transit for the disabled.
- The average round-trip fare on Canadian public transit is roughly $3.50-$4.00.
- In 2001, the average family living in an area with a variety of public transit options saved $586 per month on auto expenses.
What People Are Saying
“It’s one the measures that we defended for many years.”
Jean Leveille, Transport 2000 Chair (Montreal Gazette, Aug. 3, 2005)
“I think it’s a very good move on the Conservatives’ part.”
John Bennett, Sierra Club member (The Province, Aug. 3, 2005)
“I’ve always believed in that tax credit. We’ve been advocating for it at the city for a decade.”
David Miller, Mayor of Toronto (National Post, Aug. 5, 2005)
“The Harper idea is a good thing. It’s helpful to people.”
David Miller, Mayor of Toronto (National Post, Aug. 5, 2005)
“It’s a good step.”
David Soknacki, Toronto City Councillor and Budget Chief (Toronto Star, Aug. 3, 2005)
Michael Roschlau, President of the Canadian Urban Transit Association, “welcomed the proposal.” (The Province, Aug. 3, 2005)
THE CHOICE
For too long the Liberals have talked about encouraging public transit, but they have been all talk and little action. Their policy of giving Russia billions of our tax dollars to purchase the right to pollute will do nothing to prevent greenhouse gas emissions.
Only the Conservative Party offers a real plan to increase the use of public transit by reducing the cost of ridership. Only the Conservative Party offers a “Made in Canada” clean air plan that provides incentives to Canadians instead of sending our tax dollars to foreign countries.
1. Canada, Office of the Auditor General, 2004 Report of the Commissioner of the Environment and Sustainable Development to the House of Commons, chapter 3, p. 2.
2. Canadian Urban Transit Association, “Tax-Exempt Transit Benefits: New Insights Make The Case,” Issue Paper 15 (2005).
3. Russia has pollution credits to sell because the collapse of industry in that country has reduced its gas emissions. Russian factories are not any “greener,” they pollute less because they produce less than in 1990, the base year for emission-reduction targets.
4. The motion, moved November 4, 1998 by New Democrat MP Nelson Riis, was “That, in the opinion of this House, the government should consider making employer-provided transit passes an income tax-exempt benefit.” It passed on a 240-25 vote, April 13, 1998, Division No. 366. Those voting in favour included Ralph Goodale, Stéphane Dion and Jean Chrétien.
