Thursday, August 04, 2005

Showing that CPC competence isn't an oxymoron

Babble on.

Thanks to blogger and commenter VW for noticing that the CPC has published the details of their transit tax credit plan:

“We would institute a 16% federal tax credit for transit users that will put hard-earned dollars back in the pockets of Canadians, and at the same time help our environment,” said Harper. “A real incentive like this encourages more people to take public transit which, in turn, means fewer cars on the roads and cleaner air.”

An average commuter paying $80 per month for a transit pass will see savings of $153 annually, while users of more costly commuter services like Ontario’s GO Transit will save up to $485. Importantly, the tax credit will provide real support to hard working Canadian parents, who will be able to claim the transit costs of their dependent children as well.

Within the narrow confines of this initiative, I see only one glaring hole: employer deductions. If you'd really like to push public transit, provide an incentive for employers to provide free transit passes the way they provide free parking.

And this line of attack made me cringe:

• As public transit becomes more affordable through this tax credit, more people will begin to use transit systems, and this will result in greater revenues for Transit Authorities and the municipalities which operate them. In turn, this will help them to expand service, leading to even fewer vehicles on the road.

• So, not only are we making it more affordable for people to use public transit, but municipalities will benefit from the revenues from increased rider-ship as well. And then they can provide better services which will in turn generate more use.

Municipalities may benefit from increased public transit revenues, but public transit will - and should - remain a net expenditure on government books. That is to say, each fare a rider pays is subsidized by one government or another. And if there's a tangible societal benefit to bolstering public transit use as opposed to private vehicle use, then that subsidy should remain.

Increased ridership will undoubtedly reduce the amount of subsidy per rider, which may free up resources to improve service. But even if it has that effect, this is a bit of a sleight of hand, considering that it's all prompted by a government subsidy in the form of a consumer tax credit. Since this is a classic closed system, what are the expected effects on government coffers from reduced gas taxes, reduced sales taxes on new vehicles, and reduced business and income taxes from the automotive industry? I think this entire argument is a bit spotty.

Of course, I still think this is a good idea. Unless public transit has a real competitive advantage - either price, convenience, or a combination of both - it will remain an also-ran to those with a choice of transportation means. For example, I commute by car because, while public transit would cost somewhat less than what I pay to drive, it would add a good two and a half hours on to my weekly commute, and tie me to a train or bus schedule. It's simply not worth the trade-off at this point.

Either Conservative plan - federal or provincial - might change that for a 'choice' commuter like me.

I also like the way the CPC plan outlines Liberal weaknesses. Firstly, it points out that the ruling oligarchy nicked the gas tax idea from the Conservatives. Since the Conservatives would continue that policy to help municipalities fund things like public transit, it's a winner - but I'm glad the Conservatives are taking their credit here. Secondly, it slams the Liberal Kyoto 'plan':

The Liberals have dedicated money towards buying hot air credits from other countries – instead of dealing with pollution and other causes of smog here at home; they’ll simply pay other countries for the right to pollute in our country. Everybody knows that this is buying time instead of providing real solutions.

What a lovely summary of the Liberal chicanery on this issue.

Lastly, I'm pleased that the Conservatives have provided a helpful money-in-your-pocket calculator to drive their point home. This is Salesmanship 101: for each feature your product provides, you need to answer the question "So what?" for your client. "What's in it for me?" forms the basis of any transaction - from a driver looking at switching to public transit, to a voter looking at switching to the CPC.

All in all, this is a good plan, well communicated, and well-timed to attract a headline or two. I was beginning to worry they didn't have it in them.

Babble off.


At 4:59 p.m., Blogger Question Period said...

And the poor will save...$0. Which is why the idea has been killed at the committee stage each of the four times it has been introduced. Here's the summary from 2001:

"Since the Committee is not convinced that the measure proposed in Bill C-209 is the most cost-effective means of encouraging the use of public transit, and believes that additional study is needed of measures by which public transit use among all residents of Canada, including the poor, and not just taxpayers, might be encouraged in the most cost effective manner possible in light of the fiscal realities of government, the Committee recommends that, pursuant to Standing Order 97.1, the House of Commons do not proceed further with this Bill, that the Order be discharged and that the Bill be withdrawn."

At 5:05 p.m., Blogger Walsh Writes said...

I like this idea more and more all the time.

It makes no sense to give tax breaks to companies because all companies are not created equal. If I work for Microsoft for example they can afford to give me every perk their is but if I work for Ma and Pa's little company then I scape the barrel and work for low wages too boot. Put the tax breaks in the hands of the taxpayer and thus everyone gets treated equally. Thus, if a user is low income then they will see a benefit from this endeavour but if they make big bucks not so likely I assume.

At 5:06 p.m., Blogger Babbling Brooks said...

QP, I'm not sure I agree that the poor won't save anything. Driving transit use up will keep transit costs per ride down, which benefits the poor, doesn't it? And since the viability of public transit rests to a large degree upon the financial resources provided by taxpayers, doesn't it make sense to feed the golden goose a bit?

Besides, you already have the 'captive' market - the poor. The growth - heck, the sustainability - of public transit is dependent upon gaining a greater proportion of the 'choice' market. How else are you going to do that?

At 5:23 p.m., Blogger Question Period said...

I hope that the CPC chooses not to call the poor a "captive market" in their talking points when they fight the criticism that's coming. Because the talking point that's going to be used against them is this: the poor person sitting next to you on the subway is paying more for the ride than you are.

Your points are good, but that one's pretty strong.

At 8:56 p.m., Blogger Babbling Brooks said...

QP, the real cost of a subway ride is $3.13 (latest figures I found showed a 20% taxpayer subsidy for the TTC), and a 16% tax credit would put a $2.50 up front cost at $2.10 net. I don't know how to factor in the taxpayer subsidy of almost $0.63 per ride to an individual taxpayer.

You could well be right that a taxpayer would pay less than a rider who's too poor to pay taxes, but I'd appreciate it if you could walk me through the math you're using.

And you haven't addressed my other question: what's your alternative to increase public transit use?

Incidentally, 'captive' versus 'choice' commuters isn't my invention, it was used in one of the reports I read - I think one of the Canadian Urban Transit Association papers. You're right, not a great term, however accurate.

At 9:17 p.m., Blogger Question Period said...

The math is pretty simple: if you're too poor to pay taxes, the ride will cost you $2.50 no matter what.

I support the initiative by the way. I just wanted to help you anticipate the criticism your party will get (especially when there was little Conservative/Reform support for it when it came before various Finance Committees in the past).

At 9:21 a.m., Blogger Babbling Brooks said...

Got it. My question wasn't what the poor will pay - they're getting a $3.13 ride for $2.50. My question is what the guy paying taxes would pay. $2.50 less 16% is $2.10, but he's chipping in some of the $0.63 per ride in tax subsidies - how much I don't know. If it's more than $0.40 of that $0.63, then he's still paying more for the ride than the non-taxpayer. That's what I was trying to get at.

At 5:18 p.m., Blogger sacamano said...

I can't understand why anyone (liberal or conservative) would like this plan.

I've detailed some objections over at my place; but in short: the poor, rural, and non-transit using city-dwellers end up subsidizing rich suburbanites. That's just crazy.


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