Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Posts Tagged ‘taxation

Should the rich be taxed more? A new paper shows unequivocally yes

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This Guardian post from Sunday covers the ground that can’t be in a ten minute radio interview. The toll removal commitment made by the NDP was not accompanied by any discussion of how the required funds would be found. The money raised by bridge tolls will now come from the provincial budget – stayed tuned for that announcement.

The problem revealed by the toll removal is that we still have not dealt effectively with how to pay for Translink. And the probability that the Mayors’ preferred alternative – road user pricing – is now hostage to the “Toll Free BC” slogan.

But there are people who have done very well indeed from the 16 years of BC Liberals. Not the general population, of course, just the privileged. The people who already had plenty have got much more. The inequity of the policies pursued by right wing governments, and vacuity of the “policy” framework based on falsehoods such as “trickle down theory” and ” the rich are job creators”, has been widely exposed but oddly not generally accepted. The fact that people still vote for these parties against their own interests has also been widely noted.

Is it actually likely that Mr Horgan will open the can of worms that is Translink funding? Will he really bring in more progressive taxation on the super rich? Or will he decided that the over heated property market in Vancouver allows him to rake in more from property tax which is always the favourite target for provincial politicians, as that is the one source of revenue that they don’t get the blame for?

While the article I am citing above does not mention Canada or BC the general principles do apply – which I why I am linking to it. Because I think you need to read that rather than whatever bright idea someone like me could come up with. Well researched, properly cited and evidence based policy recommendations – backed by hard data – is worth far more than just opinion.

If you would like to listen to me pontificating on Roundhouse Radio 98.3FM on this subject that is now online. Just make sure if you want to point other people to that link through social media you use  @Roundhouse983 and @mornings on twitter and Instagram and ‘Roundhouse Radio’ on Facebook.

Written by Stephen Rees

August 29, 2017 at 10:09 am

Metro Vancouver mayors lay out transit funding ideas

with 10 comments

The title comes from the CBC story, but the mainstream media are all over this today. Unfortunately to get the Minister’s response you have to go to the paywalled Sun – and this being the beginning of the month, you probably won’t have to pay. But if you do, don’t bother becuase it is all entirely predictable.

UPDATE – as you would expect the media are catching up and Jeff Nagel now has this piece summarizing the reactions including those of the minister. So you don’t have to worry about paywalls at the Sun and Globe.

It doesn’t matter how good these ideas are. Nor even how acceptable. Mary Polak isn’t going to make any decision.

“We’re nowhere near a decision that says whether it’s on or it’s off,” Polak said Wednesday. “There just isn’t enough information yet.”

Polak said mayors have made “good progress” in making the case for new funding sources for TransLink.

But she said she’d need greater detail, including how much new money in total mayors envision raising for TransLink and the timing of major rapid transit lines in Vancouver and through Surrey to White Rock and Langley.

“They’re referencing Broadway corridor SkyTrain as well as the Surrey one,” Polak said. “We need them to find consensus on what would come first.”

There is an election coming up, and the BC Liberals are already laying out their appeal in the adverts that you, the taxpayer, are funding. “Lowest income tax” and all that. Indeed as you would expect

Jordan Bateman with the Canadian Taxpayers’ Federation doesn’t like any of the ideas. “I think it’s absolutely abysmal news for taxpayers,” he said. “I think taxpayers are going to be up in arms over this.”

The right wing frames the debate:  characterizing all taxation as bad, and all government spending as wasteful and inefficient. They also like to create the illusion that we “can’t afford” any new public expenditures and we are taxed to the max. Nothing could be further from truth, of course.

But to return to the Minister – the reason she is not going to be making any announcement is she doesn’t have to, and anyway it won’t be her who makes the decision. That comes much later – and even in the very unlikely event of yet another BC Liberal government, is not likely to fall to her. It will, make no mistake, be a provincial decision.

Indeed, it is the height of chutzpah to maintain the fiction that the Mayors get to make any contribution to it. The reason that there is only a Mayor’s Council at all is that when they were on the Translink Board they did not understand that their opinion only counted when they agreed with provincial priorities. They dared question the Canada Line and insisted that the Evergreen Line proceed at the same time. It is exceedingly ridiculous that they are now being chided that they have not come up with a set of priorities for rapid transit – the Broadway versus Surrey debate. Obviously both are needed, for quite different reasons. But in any event, the tame “professional” board showed that they understood provincial priorities when they started to cut – sorry, reallocate – transit service – but protected spending on the newer, much wider Patullo Bridge.

The Province does not really care about transit – any more than it cares about greenhouse gas emissions. It just recognizes that at times it has to appear as though it does.

The only new item on the list is a regional addition to the soon to be reinstated provincial sales tax. Adding 0.5% within Metro is said to raise $250m a year – and presumably is thought small enough that it will not drive more cross boundary shopping. Sales tax is a frequently used funding device in the United States, but its use here would be innovative and would require legislation.

The vehicle levy is back on the table too – which also requires more provincial legislation. It has been one of the legally approved sources for Translink since its creation, but has never been implemented.

They would also like a slice of the carbon tax – and a look at road pricing for the future. Neither of those are going to happen as they are both contrary to current government policy. The carbon tax is only to be used to lower income tax (“revenue neutral” – the same phrase that stuck us with the hugely increased costs of UPass) and tolls are only permitted on new roads/bridges.

Again, the province does not have to look at any of the proposals in any objective fashion. It simply has to appeal to affordability for families (cue the CTF). Odd that Christy still seems wedded to the idea that somehow she can get women to vote for her if she says the word “family” often enough without actually doing anything to help them.

What we are seeing is a ritual dance. We simply keep going round in circles until the music stops. The Mayors play along because most of them are “free enterprise” voters – and mostly supporters of the BC Liberals. Though they would never admit the link. They wear labels like “non-partisan” – but easily cross over to provincial politics when the opportunity is presented.

The real argument ought to be why there is no money for transit when there is always money for roads. Why the province has foregone provincial revenues from royalties in order to promote yet more natural gas extraction at a time when that market is actually glutted and prices are dropping, and are now competitive with coal. Why the province has shifted from a progressive, general revenue source (income tax) to a regressive, dedicated source (Medical Service Premiums). Why is it that transit spending always has to be cast in the light of a purely local service that municipalities must pay for, when they do not have an adequate source of revenue?

This is not a new debate. It is the same one we have been having ever since operating streetcars ceased to be profitable for the private sector. And the province of BC has always been calling the shots – taking credit for the few successes and passing the blame along for the inevitable failures. Cutting the ribbon on the big projects – invisible when critical issues like “where’s my bus?” surface.

There is one additional source I have failed to mention: “a share of increased land value along transit corridors.” Isn’t that what property tax does? Or should do? Has not the land value around – to take one example – Marine Drive Station – shot up? It is no longer empty industrial land but a major mixed use development (mostly housing). Of course, much of that increase goes to the City – and as we know, incremental residential tax revenues are less than the incremental cost of services for the new residents. So we add some premium levy on the property value increment that the developer has to pay – “value capture”. You know what happens then? The developers go elsewhere: there are always other places where the premium will not apply. A similar scheme was mooted to pay for Toronto’s Sheppard Subway – which lasted as long as the first announcement from a developer that if he had to pay a levy to the TTC he would do his development in the suburbs where the levy would not apply and not help pay for the station beneath it.

It is part of the lesson that all should understand. That when you alter taxes you change the incentives. Raise the gas tax and people drive less. Raise the carbon tax – same response. Impose a land value increment levy and watch the development move to less transit oriented areas.

We do not need any of these five proposals. What we need is an end to the sweetheart deals on natural gas – indeed an end to all fossil fuel subsidies. We will need a congestion tax but there has to be a viable alternative in place for trip making first. A congestion tax – or road pricing – cannot reduce congestion if the only way to make the trip is driving. We will also need a lot of work on figuring out how to protect personal privacy. The smart meter fuss will appear trivial in comparison. So yes to road pricing but not yet – and we need new revenues right now.

In the meantime, we have to abandon MSP and go back to the sort of income tax levels we had twenty years ago. The rich must pay more tax, and their opportunities to evade and avoid have to be eliminated. And that cannot apply just to Metro Vancouver – or even just to BC. There has to be a National Transit Strategy – and a Ministry of Cities in Ottawa. We cannot continue to talk about transportation as though land use was some sort of exogenous variable. We cannot talk about paying for transit as though that can only fall on residents of areas that have good transit service now. We cannot talk about health as though only expenditures on building and running hospitals count. More walking, cycling and transit will improve health and also cut hospital costs, incidentally.

We have to stop the ritual dance, and start having a real conversation about what sort of urban society we want in a post carbon, sustainable future.

And I won’t be holding my breath until that happens.

Written by Stephen Rees

February 6, 2013 at 10:35 am

Posted in sustainability, transit

Tagged with

BC’s Regressive Tax Shift

with 13 comments

This post is not about a new report. In fact the data comes from something published in June 2011. It was drawn to my attention by a Green Party of BC tweet. So it is timely in the sense that the BC Liberal government is using your money to buy air time for adverts that tell you how well off you are thanks to their taxation policies. And what they say is a Lie. Since the BC Liberals came to power what had been a slightly progressive taxation system has become regressive. Poor people in BC pay more tax than rich people.

The Report is subtitled “A Decade of Diminishing Tax Fairness, 2000 to 2010” and is available as pdf from The Canadian Centre for Policy Alternatives. It was written by Marc Lee, Iglika Ivanova and Seth Klein.

This report examines changes to the provincial tax system over the last decade.
We look at the total provincial tax rate for households at different income levels
(the actual tax bill as a share of household income for all personal provincial taxes
combined—income, sales, carbon and property taxes, and MSP premiums).

We find that together these changes have created a tax system where the rich now
pay a lower total provincial tax rate than the rest of us.
• In 2000, most BC households paid about the same total tax rate, with
households in the top 10% and top 1% paying a little more.
• By 2010, however, the tax system had become regressive, with the richest
20% of households paying a lower total tax rate than the rest of us.

This regressive tax shift was driven by the following:
• Large income tax cuts primarily benefited upper-income earners, both in
dollar terms and as a share of income.
• Combined, tax cuts delivered an average of over $9,200 per year to the
richest 10% of BC households, and more than $41,000 to the top 1%. In
contrast, lower income households received an average tax cut of $200 per
year, and those in middle got just over $1,200.

• Between 2000 and 2010, the share of provincial government revenues coming from personal income taxes dropped by nearly one third.
• The province now collects more revenues from sales taxes (28% of revenues) than from personal income taxes (27% of revenues).
• BC families now contribute more in MSP premiums than businesses contribute in corporate income taxes.

Screen Shot 2013-01-16 at 2.06.13 PMScreen Shot 2013-01-16 at 2.08.35 PM

This morning the Premier held a press conference where she defended the government ads as means of building consumer confidence in the economy against BC NDP cynicism (according to Ian A Bailey of the Globe and Mail).

I know that I have been accused of cynicism more than once, but in the face of the current pre-election propaganda assault – which we are paying for – I cannot think of a more appropriate response. Except mine is not NDP cynicism.

MSP premiums went up again this month. At one time those were paid by the BC Government to those of us who drew Public Service (and teachers’) Pensions. No longer. We also have to pay for the Blue Cross premiums: the so called “Fair Pharmacare” programme does not actually pay out anything at all for the four figure annual prescription cost I have to pick up  that neither Blue Cross nor the public sector covers. The same government of course sent me a letter reassuring me that the value of my pension had not been reduced. They were just not letting me keep as much of it but were clawing it back through fees. And the sort legal gymnastics that the healthcare insurance industry has perfected in the US to avoid paying out much of the claims made against policies they write.

So no I do not have more disposable income, which as far as I know is about the only thing that “promotes consumer confidence”. I suppose she means that it is necessary to get more consumer spending going to increase the size of the economy . But the only way that can now happen, given the most of us now have less in our pockets, is that we borrow more to boost our consumption. I cannot see that has helped to build a sustainable economy – and was a contributing factor to the 2008 crash. It also seems to me that the increased reliance on sales taxes must have had some influence on the growth of cross-border shopping which has been so helpful to Whatcom County.

On the whole the idea that the BC Liberals are a party that can be trusted to run the economy properly does not seem to have been borne out by experience. Yet they will still have a very significant number of people who will vote for them. Hopefully, not enough to get them re-elected.

 

Written by Stephen Rees

January 16, 2013 at 2:33 pm

Posted in Economics, politics

Tagged with ,