A YES to new transit and transportation funding will benefit lower-income households

March 5, 2015

A choice is before us. Metro Vancouver’s upcoming transportation referendum is a rare opportunity to significantly enhance transit services, boost local employment and tackle climate change. 

Metro Vancouver voters are being asked to support a 0.5 percentage point increase to the provincial sales tax (PST), which would raise $2.5 billion over ten years. Together with contributions from federal and provincial governments this means an overall $7.5 billion capital plan for transit and transportation.

New funding will not go to existing Translink operating costs, but rather is earmarked for new infrastructure and transit capacity – a commitment that will be independently audited.

The full ten-year transportation plan is designed to improve mobility for all of us in this region. It will mean road and bridge improvements, and substantial new transit infrastructure including 400 new buses, new rapid transit lines in Surrey and Vancouver, and new bike routes.

These transit enhancements are especially vital for low-wage and immigrant workers, who often have to commute long distances, and who frequently work night shifts when transit options are currently limited (the Mayors’ plan would see a 80% increase in night bus service). It’s also of special importance to youth and seniors, who rely more heavily on transit, and to seniors and people with disabilities who rely on HandyDART services (which would be boosted by 30%).

The status quo of increasingly congested roads, long delays, and overcrowding is not a viable option.  With Metro Vancouver’s population expected to grow by a million people, we desperately need more transit (for reasons related to both equity and climate), and we have to collectively pay for it one way or another.

That said, many are understandably worried about the impact of a sales tax increase on low-income people. As social justice researchers, we share those concerns. But whether or not the tax increase is fair depends on how the tax is structured and what we use the money for.

It is true that sales taxes in isolation are regressive, meaning that while upper-income households pay more in dollars, lower-income households pay more as a share of their income.

However, the PST does not apply to core necessities such as rent, groceries, and child care, so much of what lower-income households spend their money on is exempt from the tax. For example, households with income of $20,000 would see their costs go up by about $4 per month.

But it’s not enough to look at the revenue side alone – what we spend the additional revenue on also matters. For example, Scandinavian countries have much higher sales taxes than we do (Sweden’s is 25%), but their public expenditures on universal, high quality services greatly reduce inequality, making the overall tax system much more progressive than ours.

In this case, because the new investments will go mainly to transit improvements, which particularly benefit lower-income people, the transportation plan is progressive overall.

Because the plan will make transit faster and more convenient in every part of the region, it also means more people will be encouraged to switch from commuting by car to transit. Such shifts result in savings on gas, parking, and car maintenance. And if a family finds it can now do without a car, the savings amount to thousands of dollars a year.

Last but not least, any regressive impact of a sales tax increase could be easily fixed.  Given the political will (and enough pressure), the provincial government could increase the PST credit, boost the low-income carbon tax credit, or extend the discount student U-Pass to lower-income people.

The proposal before us is imperfect, but it would be a mistake to let the perfect defeat the good. The mayors have presented us with a bold transportation vision for our growing region. We should not let our frustrations with the provincial government or Translink stand in the way of this rare opportunity to improve our quality of life.

If you’re angry about the choice of a sales tax increase to fund the transit plan, we invite you to channel your energies into pushing for a fair tax system rather than voting No on this proposal. We need new transit infrastructure, but we also need fair tax reform – and we will continue to advocate for both.