Transit funding: why not corporate taxes?

In my last post, I suggested one of the simplest ways to pay for some of the transportation improvements we'd like to have in the future, and it looked a lot like how we've paid for transportation infrastructure in the past - income tax.

Although Metrolinx doesn't seem to be seriously considering this as an option, the City of Toronto's "Feeling Congested" initiative does, and according to its math, a 1% increase gets us 3/4 of the way to $2 billion a year. But despite that, income tax ranks 7th as of last check on the site in terms of where others rank their choices. So maybe I'm not in step with the wider population on this.

Yesterday I went to the Metrolinx "Big Move" consultation at Metro Hall. I was glad to hear some voices asking about another tax that had already been on my mind and is curiously absent from these consultations, a tax that's been lowered substantially over just the past few short years: Corporate tax.

One of the greatest arguments in favour of expanded transportation and transit funding is its detriment to the economy - $6 billion dollars a year, says the Toronto Board of Trade.
Also in the name of the economy, we've cut corporate taxes.

Nationally, the numbers look like this:

 

Currently, corporate federal taxes stand at 15%. Raising them back to 19.5% would raise $10 billion a year. Since the GTHA represents 20% of Canada's population, that could raise - again, exactly the amount Metrolinx is looking for of $2 billion per year.

But we'll wait forever if we expect the feds to do anything (or at least until 2015). So let's try the province. They haven't been so foolish as to cut their revenues so drastically, have they?

Of course they have - lowering the corporate tax rate from 14% to 11.5%. 
Let's see, Ontario budgeted $10.8 billion in revenue in corporate taxes in 2012-13.
14/11.5 = 1.217
x 10.8 billion
=13.15 billion.
That's a difference of $2.35 billion per year.
Again, it's amazing how each of these tax cuts, corporate and otherwise, over just the last 2 or 3 years so consistently add up to almost exactly what Metrolinx is looking at additional revenue to build the Big Move.

I point this out in part because I fear we're being offered a slightly false choice in some of these consultations. There certainly seems to be a lot of appetite for dedicated transit funding, which I completely understand. But it's also important not to lose sight of the big picture of what kind of revenue tools not only build transit, but build our society in a just and equitable way, and where the tax/revenue tool burden should fall.

I say this in part because many rather smart people seem to be increasing advocating for a regional sales tax - an idea I have some sympathy for, but moves increasingly lower on my list of options the more I think about it. For those of you weighing your options for transit funding, ask yourself this question - if you were premier, would you lower corporate tax cuts and increase sales taxes? Would you lower progressive income taxes in order to raise regressive, flat sales taxes that hurt the poorest of us more than the wealthy? Probably not. And there's an element of the current discussion that seems to seek to do so in an awfully sneaky way.

Of course, another option is to seek revenues from drivers in a variety of ways. I think this is generally a good idea, although fraught with peril, as Rob Ford's repeal of the modest vehicle registration tax in Toronto demonstrates. But after yesterday's Metrolinx session, I'm thinking a bit differently about some of those, thoughts that I'll save for my next blog post.