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The Duty Free Swindle

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I have always believed what my father told me. “Just because it says ‘Duty Free’ does not mean it’s Profit Free.” The Guardian has an article that shows how duty free shops in England have been pocketing much of the VAT rebate that people travelling to places outside the EU should be getting.

Practice varies in other countries, but at least many airports now offer free wifi. So if you are whiling away the time and find the Duty Free shop to be a relief from the crowded departure lounge you can at least check on prices back at BC Liquor stores of things you might want to buy. On our last trip back through Kingsford Smith (that is the name of the Sydney International Airport SYD) I was pleasantly surprised to find Australian vintage port. This, of course, is not on offer here. But it was attractively priced compared to what is – and it tastes remarkably good. Equally Dalwhinnie 15 year old single malt was on sale, and at a price for one litre what we pay for 0.75 litre here.

BUT the price of a bottle of alcohol in any retail store is still mostly tax and markups of various kinds. There is some analysis on this page but it is in Euros and is a bit out of date. But the principle holds. There is a direct correlation in the mind of the consumer between quality and price: if it is that cheap, there must be something wrong with it. For many consumer items, price is used as an indicator of quality and this is also the case in Duty Free shops!

As an aside, I do want to praise YVR for changing their policy. At one time, whenever on my way to visit my family in England I was disappointed to find that the shelves in the international terminal duty free shop did not carry BC wines. There was Canadian wine, but it came from the Niagara region of Ontario. That is no longer the case, perhaps because enough people like me complained.

Written by Stephen Rees

December 30, 2015 at 4:41 pm

Posted in Air Travel, airport

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Transportation Funding in Metro Vancouver: Mayor Richard Walton today’s Carbon Talk at SFU

with 4 comments

I suppose I could have sat at home and watched the live webcast, but as I had just finished this morning’s post I saw a tweet about the talk, and decided to go. I need to get out more, and I should not let a little thing like a Pineapple Express deter me. I am pleased to report that people were following the webcast and tweeting in questions (you can follow Carbon Talks too). And if this report seems inadequate, or you want to check its reliability, the whole thing is now available on video.

In May last year the Mayor’s Council approved a set of 13 Guiding Principles for Funding of Regional Transportation and these were printed and distributed around the lecture theatre.   My eye was caught by no 4

“Revenue sources should provide pricing signals to link desired user behaviour to overall transportation objectives.”

It seems to me that sets the tone of the discussion since it clearly puts defenders of more property taxes on the back foot. However, as Mayor Walton acknowledged, you do not want to be too successful at this since of you deter people from driving by raising the gas tax (or imposing a carbon tax) you increase demand for transit at the same time as reducing its funding.

He opened by observing that Translink runs “one of the best systems in the world”. He acknowledged “it’s got a little edgy lately, since all power lies in Victoria. ”  He put up slides showing the present Governance Structure – which is complex but pointed out “We [the Mayors Council] appoint the Board”. It is at the policy level that accountability is unclear since the Board, Mayors Council. Commissioner and province are all involved – but are all “in separate boxes”. The current review of the structure notes that the following attributes are all required Accountability, Advocacy, Transparency, Responsiveness, Clarity and Productive Relationships. They are all supposed to mesh – but in some respects Translink does not match up well to the four cities Ken Cameron and Clive Rock decided to compare us to – Brisbane, Stockholm, Vienna and London.

The funding context is that Metro Vancouver is still experiencing growth in both population and its economy but demand for transportation is growing faster than either, and the current portfolio of funding sources is not keeping pace (6% growth in population, 17% growth in transit use). Both the gas tax and property tax were said to be “maxed out” and had a declining share of the total. Fares now account for 40% of revenue [compared to over 50% in 2004] Direct user fees that are proportionate to transportation use (fares, gas tax, parking tax) account for 72% of revenue, indirect beneficiary fees (like property tax) 28%.

The province has stated that its priorities for new revenue sources are affordability for families, regionally based, support for the provincial economy and benefit capture. Mayor Walton stated his position that “the rest of the province should not have to support Translink”.

Looking at potential new sources was, he said, not so much looking for a silver bullet as silver buckshot. There has already been an evaluation which puts at high status on the carbon tax, fuel taxes, the parking sales tax (which though small is very unpopular with impacted businesses) The vehicle levy would join them except that the province has three times already “shot down” proposals to implement what is now in the Translink legislation. The idea of a regional sales tax got added at the last discussion as even a small increase would collect such a large amount of money: an extra 0.1% on existing sales tax would collect $50m in Metro. Sales taxes are widely used to fund transit in the United States. (He said “North America” but I think this term I use is more accurate.)  He also speculated about a conversion of HOV lanes to HOV/Toll lanes (single occupant vehicles permitted for a fee by distance). He spoke warmly about road pricing as the closest to a silver bullet but said it would be a 3 to 4 year “voyage” to get that established – which does not fit provincial election timetables. He also said that land value capture  could only be applied to SkyTrain as it has much more impact on density and land value than, for instance, increasing bus service frequency. Gordon Price demurred thinking that BRT might qualify.

“Germany leads the world in transit governance” because all the stakeholders get a seat at the table rather than occupy silos as ours do.

Q&A

Eric Doherty made the point that the funds apparently available for the Massey Tunnel replacement would be more than enough to build the transit system we need.

In a discussion of the development levy, I pointed to the experience of the TTC and the Sheppard subway (developer fees were abandoned, when the developers said they would simply move their projects beyond the TTC’s territory). Gordon Price agreed that this had been the experience in Surrey where development cost charges in Surrey City Centre after the last Expo line extension saw development go elsewhere. Jeff Megs observed that they do work in Hong Kong, but only because the transit agency is the developer, and the density increases are huge. He did not think that similar density increases would be accepted here, and besides the City already captures much benefit for other things such as community centres and day cares. He  observed a “personal income tax increase is also not going to happen” [up until then, no-one else had mentioned them.]

The province is convinced there is room for an increase in property tax [because other cities pay more] but Mayor Walton said this is contrary to the affordability for families principle. And in any event local government in general only gets 8% of all taxes collected but delivers a wide range of services. Their only other source is fees “and it is political death to raise user fees” about which voters feel even more strongly than property tax increases. Jeff Megs stated that the Translink legislation caps the contribution made by property tax, but said that Adrian Dix has gone on record as willing to consider using the carbon tax to pay for transit.

One questioner suggested that people would support charges that clearly benefitted their area. If the fees collected were earmarked for projects in their community, they would support them. Mayor Jackson of Delta has consistently reiterated that Delta pays for more for Translink than it gets in transit service.

In response to another question Walton identified the central problem for governance as a lack of trust. “I don’t  understand where these perceptions [in Victoria] come from.” There is, he noted, a hesitancy to come to the table – and emphasized that this was not partisan it was equally shared by NDP and Liberal governments alike. “I think if you fix the governance trust issue, the funds will flow.”

Gordon Price observed that there were two different standards for transit and road funding. The freight industry just goes straight to the top and gets what it wants with debate. Road building – the new Port Mann and the replacement for the Massey Tunnel proceed simply due to measurements of delay. The projects are said to be justified by time savings – but transit is said to be inefficient, and costs must be saved by increasing delay to users through lower service levels. He said the Translink Board had similar priorities when the Patullo Bridge project did not get cut when bus service was.

Nancy Oweiler responded that “the Patullo Bridge is not a done deal. We have no way to fund it. But we do have to be concerned about some very basic public safety issues.” The recent audits had all said that Translink was doing well but there is always room for increased efficiency. She said – humorously I think – that it would be a good thing is Translink could impose “secret fees” like the airport does.

It was confirmed that no-one from the province was actually in the room.

REACTION

I pointed out to Nacy Oweiler that the Airport Improvement Fee was not a secret when first imposed – and is propelling airport users to seek cheaper flights south of the border. I also tackled Jeff Meggs who reacted “Why so angry, Stephen?”

The answer is that I was appalled that the NDP appears to have abandoned the idea of a progressive taxation system. He said that personal income tax already pays “for many good things” and thus  could not be diverted to transit. He continued that the NDP has no intention of removing the MSP as it collects such huge amounts of money. I retorted that was one of the main reasons for replacing it. It now collects more than Corporate Income Tax but like all flat fees was desperately unfair to those on lower incomes. The rich really do not care very much about flat fees as they have such a limited impact on them.

It seems to me that the NDP is indeed committing the same errors of New Labour in Britain – so anxious to get elected that it has moved to the right, and in this case needlessly. The present government will fall as it has demonstrated how hopelessly incompetent and compromised it is. The “ethnic vote” scandal merely being the latest of a series of blunders. The voters want a different government, and would hardly be deterred even if the NDP was in fact still socialist. Instead Adrian Dix is doing his best to be reasonable. I am sure Jeff misspoke when he said they would cut corporate taxes – I am sure he meant restore to the levels before the last round of cuts – but such a thing is not inconceivable. The NDP appears to be as enamoured of LNG as the Liberals.

I believe that Richard Walton is indeed sincere when he says that he is non-partisan. I also believe he is fundamentally wrong in his understanding that there is no benefit to the rest of BC to have a decent transit system in Vancouver. National tax revenues support transit systems in the major cities of every other nation on the face of the earth. I am absolutely certain that you would never hear a Mayor of a Parisian suburb stating that the people of Perpignan should not have to pay towards the RATP/STIF. Actually, a lot of their funds come from a regional employment tax, but we didn’t talk about that either.

I wish I could feel happier about the outcome of the current governance review. Three of the four cities chosen seem fair comparisons – but London? Really? The scale alone is different. And it is the national capital of a major power – albeit one in steep decline.

The present system is a mess – and I think a lot more needs to be done than tinkering with current structures. But then I also cannot possibly endorse the sentiment that Translink runs “one of the best systems in the world”. Words fail me – but I wouldn’t mind betting the regulars will have some figures to show how laughable that statement is.

Written by Stephen Rees

March 1, 2013 at 4:58 pm

Airport’s mall plan angers authorities

with 2 comments

The Globe and Mail‘s headline included the words “in Richmond” but the story also notes the dismay of Metro Vancouver

Vancouver International Airport, where politicians and planners are fuming over the airport authority’s plans to partner with London-based McArthurGlen in building a massive luxury outlet mall.

The proposed 460,000-square-foot mall will be three kilometres from the airport terminal, on 22 hectares in the southeast corner of Sea Island, near the bridge that crosses to Richmond’s Lulu Island.

Well, there are two bridges that do that – Dinsmore and No 2 Road

Both of them feed onto Russ Baker Way – and thence to the Arthur Laing Bridge. Thats three lanes of traffic plus the airport’s two which results in congestion and tail backs at peak periods – morning and evening.

Google map of the SE corner of Sea Island

Google map of the SE corner of Sea Island

Richmond is questioning whether the airport has a mandate for a mall – when it is supposed to be running an airport. It seems to me that YVR can legitimately get into retail for airport users and staff – but a “luxury outlet mall” remote from the terminals seems to be stretching that more than a little. Moreover, the airport needs to keep some sense of perspective. The opening of the Canada Line has made a huge difference to mode share at the airport and allowed the authority to make much more profitable use of its limited curb space. But all that depends on the people who do not arrive by train having a reasonable chance of getting to their plane on time. Most mornings, AM730 is going to be reporting the same issue – back ups to 64th Avenue as now. It is in the afternoon that things will get hairy as people trying to get to and from the mall mix with all the other traffic. The AM peak is short and sharp: the evening peak is longer and heavier, and adding shoppers is not join got help anyone – especially those really desirable travellers who have spent a business day in Vancouver and now want to leave on time.

YVR is, of course, completely unaccountable. Its board is appointed, and it reports – after a fashion – to Ottawa. Though for all intents and purposes it can pretty much do as it pleases. This is not winning it many friends. It is also a cash cow for the feds – who get ground rent from it. Quite a bit of attention is now turning to what this does to the famed “competitiveness” of this essentially private sector operation. They are losing local passengers, who are finding fantastic bargains a short drive away at Bellingham. Heck, you can even park at the terminal there for $10 a day for as long as you like (beware the predatory adverts from the park and fly merchants who offer much worse deals). At the same time Calgary is going after the “gateway to Asia” traffic with its own huge expansion.

The only question in my mind is what, if anything can the City of Richmond and Metro actually do about it?

Written by Stephen Rees

July 19, 2012 at 8:11 pm