THE BLOG
05/01/2014 09:45 EDT | Updated 07/01/2014 05:59 EDT

Borrowing for Transit is a Tax on Future Taxpayers

TORONTO, ON - APRIL 2: Lansdowne 512 streetcars pass each other at Wychwood Ave and St. Clair Avenue. TTC stats suggest that the St. Clair right of way for streetcars has improved ridership and cut transit trip times. April 2, 2014.        (Chris So/Toronto Star via Getty Images)
Chris So via Getty Images
TORONTO, ON - APRIL 2: Lansdowne 512 streetcars pass each other at Wychwood Ave and St. Clair Avenue. TTC stats suggest that the St. Clair right of way for streetcars has improved ridership and cut transit trip times. April 2, 2014. (Chris So/Toronto Star via Getty Images)

At first glance, the Ontario government's recent transit announcement seems like a revelation. After a year of mulling about new 'revenue tools' to raise a desired $50 billion for Metrolinx's Big Move, Premier Wynne announced the creation of two new funds that simply direct a portion of existing gas taxes into a dedicated fund for transportation.

Taxpayers breathed a sigh of relief. No new taxes were included in this new funding scheme.

It sounds a bit like the proposal put forth by the Canadian Taxpayers Federation, who have longed called for a Gas Tax Accountability Act to ensure adequate funds are allocated towards roadway infrastructure. Similar to legislation in Manitoba, this law would transparently tie all revenues from gas taxes to expenditures on roads.

Wynne's proposal does not dedicate all revenues from gas taxes to roads; just some of them, and this money will be split into two funds, one for Toronto transit, and a separate for roadway spending across Ontario.

It's far from perfect, but it is a sign of good will that the government has been listening to its critics -- namely the Ontario NDP who demanded no new taxes on "the middle class" and the Canadian Taxpayers Federation who has long called for a dedicated fund to tie taxes collected from drivers with roadway spending.

In its pre-budget submission presented earlier this year, the CTF demonstrated how Ontario raised $6.13 billion in 2013 from taxes on Ontario drivers, including over $3 billion in gas taxes, $1.85 billion in HST on gas and diesel taxes, and $1.27 billion from vehicle and driver registration fees. Yet, in the same year the government spent a mere $2.7 billion on all roadway spending. This leaves a $3.34 billion gap between what is collected from drivers and what is spent on roads. No wonder congestion is clogging our cities.

The math does not lie. Instead of improving our roads, governments have been taking money from drivers in this province and spending it on political projects favoured by special interests. It is good to see that Premier Wynne is committing to reverse this trend. But is there more to this announcement?

In this frenzy leading up the budget, the government has keenly leaked its own budget through a serious of spending announcements. We have only heard about new spending and no cuts. In fact, according to documents obtained by the PC's, the Wynne government's pre-budget leaks total an astonishing $5.7 billion in new spending.

This doesn't exactly lend credibility to the assurance of no new taxes.

Other large questions remain. Premier Wynne has told us how she will raise $15 billion for transit, but we know that her Big Move project will cost taxpayers $50 billion. Where is the rest of the money coming from?

We've heard some talk about the government borrowing or issuing "green bonds" to finance this plan. Let's be clear. Regardless of its colour, debt is debt. Ontario's debt stands at $273 billion. The government added over $11 billion to it just this past year. And judging from the Premier's latest transportation announcement, she may want to add yet another $35 billion to it.

Today's debt is tomorrow's taxes.

Should we be happy that the Premier has decided to use some of our gas taxes to finally invest in transportation? Yes. Should we be worried that this latest move is just a slight of hand from a government used to hiding numbers from taxpayers? Absolutely.

This commentary first appeared in the Toronto Sun on Easter Sunday.

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