In a Q&A, Professor Robin Lindsey, the CN Chair in Transportation and International Logistics, walks through the pro and cons of supporting Metro Vancouver’s upcoming referendum.
From March 16 to May 29, voters across the Lower Mainland will be deciding whether or not to support a new 0.5 per cent Metro Vancouver Congestion Improvement Tax, which will be tacked onto the PST. If the referendum passes, the new funding will go towards a $7.5-billion plan to improve transportation in the region, which includes a subway on the Broadway corridor, light rail in Surrey, a third Seabus, a new Pattullo Bridge, new bus lines and other upgrades across the region.
Lindsey says the plan and the tax are far from faultless, but may well be better than dragging out the long stalemate keeping transit at a halt in the region.
How should I vote?
People often react instinctively against a new tax – so two points are worth keeping in mind. One is that the best should not be the enemy of the good. The plan is unlikely to be the finest investment package that could be devised, and the congestion tax is not a theoretically ideal way to pay for it. Nevertheless, approving a reasonable investment-funding package may well be better than continuing the long stalemate on finding a long term, sustainable means to fund transit in Metro Vancouver.
The other point is that it’s almost impossible to design a policy that benefits everyone. As an eminent economist remarked long ago, if reasonably good projects are implemented on a consistent basis, and the distribution of winners and losers varies from project to project, almost everyone will be better off in the long run. That sounds like a worthy guiding principle for Metro Vancouver.
The best should not be the enemy of the good. Approving a reasonable investment-funding package may well be better than continuing the long stalemate on finding a long term, sustainable means to fund transit in Metro Vancouver.
- Professor Robin Lindsey
What happens if the referendum is defeated?
While similar referendums have been successful in the U.S., they often take years of planning and multiple attempts, so it’s difficult to predict how the vote will turn out here. The stakes are high since, as the Chair of the Mayor’s Council Richard Walton has said, there is no Plan B.
If the referendum fails, could the plan still get funded? Extracting more money from existing sources is unlikely. According to existing legislation, property tax increases are capped at three per cent a year and fare increases are capped at two per cent. Revenues from TransLink's fuel tax appear to have maxed out. TransLink has the legislative authority to levy a motor vehicle charge, but two attempts to introduce one were unsuccessful.
Finding alternative ways to fund two parts of the plan looks a bit more promising. Linda Hepner, the new mayor of Surrey, has promised light rail will be running by 2018. She says if the referendum fails she’ll pursue a public-private partnership to start the project. And for the Pattullo Bridge replacement, the province has promised to cover part of the cost, and TransLink intends to toll the new bridge. Tolling other bridges and major roads in Metro Vancouver is also conceivable, but it will require extensive study, and cannot be done quickly. Still, road pricing is part of the Mayor’s Council's long-term plan, and might actually be more likely if this referendum passes.
Is the sales tax a good way to fund transit?
Sales taxes have some strengths. They tend to yield predictable and sustainable revenues. The burden is widely shared among residents, and tourists also contribute when they buy goods and services in the region. The congestion tax is also transparent since the revenues are dedicated to the plan, so people know how the money will be spent.
One weakness of the tax is that it’s not directly linked to the use of transit or roads. Unlike transit fares or tolls, the tax does not satisfy the beneficiary principle which states that public services should be paid for by those who use them. The tax will also do nothing to encourage travel using transport modes, routes and times of day that are less congested and polluting.
Will the sales tax really reduce congestion?
While the tax itself won’t really affect congestion, the plan that it supports might affect travel in the region if people switch from driving to transit. That will depend on how much transit service is improved, and will vary across the region.
One view is that the plan will not reduce driving much, but will benefit transit users through more extensive, frequent and reliable service, and better connections.
Another view is that the plan will reduce congestion over the long term as people gradually adapt by owning fewer vehicles, and relocating closer to improved transit routes where they can rely on transit for a larger fraction of their trips. New residents and young people are likely to be the most affected, and there will be a lot of them since the population of Metro Vancouver is forecast to increase by one million by 2040. Just holding congestion in check might be enough to justify the plan, as roads will get increasingly congested if nothing else is done. The plan can have other beneficial effects too, such as reductions in crashes, pollution, greenhouse gas emissions and noise. The demand for scarce parking space will also fall if vehicle ownership declines.
Skeptics of the plan may argue that expanding road capacity is a more direct and effective way to ease congestion. However, space constraints, high construction costs and environmental opposition militate against it. Moreover, new lanes often fill up with new traffic so that driving ends up barely faster than before. Indeed, one landmark study of the U.S. found that building new roads does not relieve congestion in the long term.