A new regional sales tax adding up to 0.5 per cent to the cost of local goods is being proposed by Metro Vancouver mayors as one of the new tools they want to help fund TransLink.
At 0.5 per cent the tax – tacked on top of the seven per cent PST on transactions within Metro Vancouver – would raise an estimated $250 million per year from transactions within Metro Vancouver, according to a technical analysis that examined potential new sources.
But mayors’ council chair Richard Walton said 0.5 per cent is the “absolute limit” of what he thinks might be proposed, adding just 0.1 or 0.2 per cent would generate “very sizable contributions” of $50 to $100 million.
“We expect opposition to come from everywhere,” Walton said. “We’re not expecting the government to say yes right away. We’re not naîve.”
The proposals are spelled out in a Jan. 31 letter from the Mayors Council on Regional Transportation to Transportation Minister Mary Polak and sales tax isn’t the only idea being advanced.
The mayors still want the province to enable an annual vehicle levy – an average of $38 per vehicle would generate $50 million – as a short-term option.
And road pricing, which could include various forms of tolling or per-kilometre charges on motorists, would be pursued as the favoured long-term transit funding revenue source, embraced by all of the region’s mayors.
Other options include either a reallocation of future carbon tax revenue or the implementation of a new regional carbon tax for TransLink.
Existing sources like the 17 cent a litre gas tax and TransLink’s property tax are already maxed out, Walton said.
He said mayors like the idea of reducing the existing gas tax over time and as other sources come on stream.
A regional sales tax would have one advantage over the others – it could be introduced very quickly.
“We’re moving back to the PST anyway,” Walton said. “So this is a logical time to look at it.”
Tourists and other B.C. residents who live outside Metro Vancouver and come into town for entertainment don’t contribute as full a share to TransLink’s costs as local residents who pay property tax, he said.
With a regional sales tax in place, he said, Abbotsford hockey fans who fuel up outside the region and drive in to catch a Canucks game would still pay towards TransLink through the tax on their tickets, he said.
Walton said using sales tax to fund the transit and road system is defensible.
“The more efficiently people, goods and services move, the more effectively the economy works,” he said.
The mayors have not spelled out how much money should be raised in total to support TransLink’s expansion plans or which sources should be used in the end.
Walton suggested if 0.5 per cent was added on sales tax, that might allow the region to forego the vehicle levy and drop the gas tax by several cents a litre.
All cities in the region agree the transit system must expand to meet the needs of the growing population, but exactly how fast and what projects go first are undecided.
“If you wanted to go ahead and build the UBC line tomorrow and roll out ALRT through Surrey, you’re talking billions of dollars,” Walton said. “You’d have to include all of [the sources] at maximum.”
Asked whether a regional sales tax might prompt shoppers in Langley to head east into Abbotsford to save money, Langley City Mayor Peter Fassbender suggested the same incremental sales tax be added in other regions to fund transit there.
“Abbotsford is facing challenges on their transit system, so is BC Transit,” Fassbender said. “We’re all dealing with increased demdand and increased costs.
“If it’s done properly and within the right context, this maybe becomes something that becomes provincial and helps overcome the funding challenges the other regions are facing as well.”
He said he supports analyzing the implications of a regional sales tax and its effects on people, adding “we’re not leaping to any conclusions.”