BC Transportation Funding Plan Will Fail

The Mayors of the GVRD have come up with a funding plan and it is time to go to Referendum. The people of BC will now vote, very specifically, to allocate a raise in sales tax to fund public transportation.

Ladies and Gentleman … welcome to a place called “Politics”. In this place, you get separated from your money in the worst way your political leaders can conceive of so that they can save face.

Consider this …

The Mayors have chosen a funding source that they don’t have to levy. Remember when it was going to go on Property Taxes?

Nope. They don’t want to be responsible for the increase … not that raising Property Taxes is the answer either mind you.

The Provincial Government, in an effort to insure it is also not held responsible for the failure to come, has promised a Referendum. Many have spoken about how this lacks leadership, but it is worse than that. The Referendum will be voted down and the Province will still have to make the decisions anyway. The obvious end result will be the Province continues to throw it back to the Mayors … and the cycle will continue while no progress is made for years. Keep in mind that this has already happened. I estimate that our public transportation and road development is more than 10 years behind where it should be. I can back that up with numbers, but that is for another column.

Let’s get to the core issue that I want to address in this column. Taxation.

The plan is to increase sales tax. This is called a “Regressive Tax”. Similarly, Property Tax, Gas Tax, user fees … these are all Regressive.

What that means … simply put … is that the burden of the tax is disproportionate based on income. Basically, it hurts the poor.

“Progressive Taxation” would be income tax increases because they are levied relative to your income.

The Liberal Government campaigns on a platform of not raising income taxes, but then raises every other form or “regressive” revenue generation available to them. The result? The highest child poverty rate in the country.

This baffles me because the long term result of regressive taxation is a drop in government revenue. Remember those poor people? Eventually, they are at their spending limit … so there goes your sales tax revenue. You get a short term bump and then over time, as other forms of tax and inflation rise, poor people stop spending. Sales tax revenue goes down and so the funding model for long term public transportation is flawed and will fail.

The option is simple. It takes math and leadership.

The math part is the easy part. Allocate a 1% income tax increase to transportation. Don’t put it into General Revenue. Buy a calculator and take that “progressive tax increase” and set it aside. If you can do it for Sales Tax, you can do it for Income Tax. Since this tax is tied to income, it will not burden the poor disproportionately than the rich. Since it is not tied to spending, it will always be there and will not drop off over time.

Regressive taxes, specifically sales and gas tax, will always fail over the long term. All governments should wean themselves from that revenue now because that revenue is not sustainable. Gas pricing can get so high that tax increases will simply not be acceptable to the electorate. High gas and sales taxes are business and investment killers. A fact that should come easy to a Liberal Government, a government that claims expertise in this area.

Property taxes are not the answer. Also regressive. Road or car levies are not the answer as they again punish the poor, even if tied to the value of the vehicle, it is the poor who take the hit. While taxing the poor so heavily that they can’t afford a car so they give it up and take transit might sound nifty, it is not how you build a middle class or an economy.

At the end of the day, a government of any level, only thrives if people are spending money. Any and all regressive taxes take away the spending power of the middle class. I could write a hundred columns on that statement alone, but the message in this column is clear.

If you want long term transportation funding, it cannot come from a regressive tax source or it will fail over time. Get over the fact that tax increases are bad. I object when taxes are misspent. Not when they go up.

Spend taxes directly on improving roads and transit and you will have a sustainable funding source. You will leave middle class people with disposable income, and you will develop the infrastructure that will allow commerce to flow.

All other options lead to the same place. Both traffic and the economy will eventually come to a grinding halt.

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