Monday, May 25, 2009

Assigning The True Cost of Transportation

I haven't yet gathered all the facts and figures but I believe it highly unlikely that the taxes and fees remitted to the government as a result of vehicle operation come anywhere close to paying the full cost of the provision of highway infrastructure. I can already hear the vehicle owners screaming as they insist they pay too much already with their gas taxes and licensing fees. Let's do some number crunching on the back of an envelope.

First, let's consider what remittances the vehicle owner makes to the government directly related to their car ownership. I think they can be divided into the following categories:
  1. Taxes paid when fuel is purchased.
  2. Annual Licensing fees.
  3. P.S.T. & G.S.T. paid on operating expenses such as maintenance & insurance.
I am now going to make up some numbers to calculate how much car owners pay. (I know these are ball park numbers.)
  1. According to Ontarians pay taxes of 14.7c/l plus 5% G.S.T. for gasoline. To make it real simple I will assume that the average owner drives 20,000 kms./yr in a car that uses 7 liters/100kms. and that gas costs one dollar a liter. Such a driver would consume 1400 liters of gas, paying $280 in taxes to the government.
  2. Annual license fee of $72.
  3. Annual additional operating expenses of $3,000 results in $390 of P.S.T. & G.S.T. payments.
So, it looks like an "average" car user can expect to pay at least $750 in taxes and fees to the government annually, depending on how much they drive. I'm willing to round that up to $1,000 per year and then double it again to $2,000 per year. I then multiply that by the roughly 7,000,000 vehicles on Ontario roads and I come up with a total vehicle owner contribution of $14 billion toward the cost of providing and maintaining our road network. Does that come even close to paying for unlimited access to tens of thousands of kilometers of roads across this province? What does it cost to build and maintain all these highways and byways? In Ottawa alone, we pay tens of millions of dollars every winter just to clear the snow.

Now, I also know that I haven't accounted for the vastly increased taxes paid by the trucking industry. However, they should pay more, as they are responsible for most of the heavy pounding our roads take.

Calculating the expenses involved in providing and maintaining our extensive public road network is a massive undertaking. First, we need to know what the province as well as every municipality is spending annually on development and maintenance of their roads. We also need to know the cost of policing these roads versus the revenue collected from fines. It would also be valuable to know the total number of lane kilometers in the province.

My goal in collecting this information would be to determine the total cost of providing the Ontario road network and compare it with the total amount of money paid by all drivers for this network. I understand that the network provides a benefit to all Ontarians, whether one drives or not, but I do believe that by far the greatest benefit is accrued to drivers. I simply want them to pay an amount commensurate with the service provided to them.

With this information in hand I would propose that we start to re-allocate the benefits more equitably. I am now going to again to the back of my envelope to paint a broad picture. Let's assume, for the sake of argument, that after all the numbers are calculated, that the taxpayer provided subsidy for the use of the road network amounts to $1,000 per year. This is a subsidy not received by non car users. If automobile users are getting $1,000 transportation subsidy, every citizen should have access to the same benefit. The question is: How do you rectify this imbalance?

I have decided to engage in some "blue sky" thinking to get us to where I think we should be. First, I propose the development of a province wide "Transportation Card" which would replace the current driver's license. If you are a driver, it would include information about the class of vehicle you are permitted to drive. It also, however, could be used as a transportation pass for any transit system in the province, including inter city bus and train travel. As every citizen requires transport, every citizen would be entitled to receive a card. Public policy would determine the total amount of taxpayer provided subsidy to the transportation system. This would include the cost of providing a road network for all users as well as the provision of publicly funded mass transit systems. The per capita value would then be embedded annually in each card distributed to Ontarians.

Public policy would need to establish a hierarchy of what form of transportation receives the highest subsidy. I advocate that the most efficient and sustainable forms of transportation should receive the highest subsidy, such as walking, cycling and mass transit, with ultimately no subsidy being provided to individual automobile users. You are free to use your car, but expect to pay the full cost for such convenience. To develop a user pay system I would want gasoline taxes and licensing fees to move toward paying for the full cost of the road network.

The ultimate idea of the"Transportation Card" is that every citizen would be able to use the subsidy embedded in the card for the type of transportation they wanted. If the car driver wanted to use the entire $1,000 subsidy to pay for gasoline or licensing fees, go right ahead. Swipe your card at the pump until the money is used. Alternatively, it could be used for a bus pass or intercity travel. Use it to buy a bicycle. Spend it on whatever type of transportation service you want. However, the more efficient and ecologically friendly your transportation choice is, the greater the subsidy from the taxpayer, and the farther you will be able to travel.

I know I am in the extreme minority on this issue. The vast majority of people I know are wedded to their vehicles. I can hear the laughter already. It is hard for most people to imagine being without a car. The point is, though, that one day personal automobiles will be a thing of the past. The question is: What is the best replacement for such an inefficient system?

Another criticism would be that this is another form of "social engineering" as I am having the government try to shape individual transportation choices. But, don't we do that already by providing a taxpayer subsidy that promotes automobile use?

The idea of having the taxpayer pay for the infrastructure of an auto-centric road network was based on the twentieth century assumption that ultimately everyone would own (or at least want to own) a car. With that in mind it was a no brainer to keep subsidizing this system. We are beginning, slowly but surely, to understand that this is not sustainable into the future. We need to start thinking about travel in entirely different ways if we are to respond effectively to the twin threats of peak oil and climate change.

No comments:

Post a Comment