Say NO to vehicle taxes

On Saturday 17 March in the National Post, Katie Rook lists the myriad waysToronto is considering to raise some cash. After all the recent screeching about how there will be no road tolls, I was both heartened and disheartened to see four automotive-related measures in her list. Mostly disheartened.

Bad news first…

I am disheartened by talk of a $40 vehicle registration tax to raise $42M. This is regressive and hurts lower income motorists disproportionately. It is listed for two reasons. It is easy to administer (and who doesn’t like easy money?) and drivers will cough-up, because the government has got you by your wheels, which is very effective, indeed. But I am disheartened because it is a money grab that does nothing for congestion. Question: Once you have paid your extra $40 will your incentive to drive go up or down?

I am disheartened by talk of a $100 per parking stall tax in downtown Toronto to raise $7.2M. This too, is regressive, hurting lower income motorists disproportionately. It is being considered for similar reasons: moderately easy administration and by the time that annual $100 is spread out it becomes 35 cents per year (likely twice that to collect it). Since you won’t even notice that, the chance this will put you on the bus is nil. Anyway $7.2M is a paltry amount in this conversation. And I don’t buy “every little bit counts” either. Taxing automotive anything without managing congestion is simply a wasted opportunity. Taxes have two purposes: Raising funds and responsible management. This, and the first idea, holds no management value.

I am disheartened by talk of road tolls on the Gardiner and DVP. Yes, you will get some attenuation of traffic, which is a good thing. But this would be a very expensive traffic sieve. You can expect a 5% spillover onto parallel infrastructure. While the Gardiner and the DVP will improve (for a while), you will move some of the problem elsewhere – and to places that you really don’t want it.

Worse as soon as you put road tolls into the same ledger column as alcohol and cigarette taxes you are branding this as a tax. That is an even bigger mistake. Charging for infrastructure use should be designed, managed and presented as market-based pricing, not as another tax grab. Why do we say “bus fare” instead of “bus tax”? Why not say “road fare” instead of “road tax”. Because of habits of mind that go back to the middle ages.

Now the almost good news…

Hidden in one of the captions to Katie’s article the words “cordon-type tax” appears. While I wince at “tax”, at least the concept admits the tools to a wide area congestion management capability.

Here’s what to do.

Drop all vehicle registration taxes – just charge costs to administer a registration system for vehicle population management.

Drop parking surcharges and apply congestion sensitive parking charges. Yes, the technology is new. Yes, it is more complex, but then lots of good things are.

Drop the idea of tolling this road or that road and start thinking about managing congestion.

Set up three annular rings: a large ring around the GTA, a smaller Toronto ring inside that and a central business district. Charge by distance, depending on time of day: 3 cents, 6 cents and 15 cents per km respectively, double that during peak hours. This will be worth a lot more than a measly $7.2M.

Give half of the money to Adam Giambrone who needs $400M per year to build light rail and the other half to some road crews to fix the streets we do have. They’re a disgrace.