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jsburbidge(... unless, they are the PCs, in which case they will probably just shelve the need.)
I'm seeing pushback on the issue of revenue tools for public transit in the GTA which seems to boil down to "2 billion a year is a small part of the provincial budget. Surely they can find it through efficiencies or reallocation?".
Well, they can't. Maybe in a world in which no Harris tax cuts had taken place, but not here and now.
Most of the Ontario budget is tied up with education (mostly schools, some universities -- 18.9%), health care(38.3%), Children's Services(11.2%) and interest on the debt (10.6%). Much of the rest is tied up in fixed costs and programs such as welfare (Ontario Works, in newspeak). Even the courts take 4.1 Billion (3.2%).
When I look at the news, I see signs of all these areas being under considerable financial stress. Hospitals are struggling to meet their budgets; the TDSB has just been fingered as diverting most of a flow of funds intended to help disadvantaged children into general revenues to make ends meet, and universities are strapped for funds; the courts have unacceptable backlogs. It has been big news that the most recent budget has made the first structural improvements to Ontario Works since the Harris years.
Plus, the Ontario economy is still faltering, relative to the strength it had for decades, so revenues are not as high as they might be.
There are, of course, always inefficiencies, though fewer than some people might think. Some "inefficiencies" provide needed redundancies to allow systems to be able to handle variations in need that can surge unpredictably. (How much do we have to provide in the way of space capacity in case H7N9 starts to spread? How much would it take to clean up after a tornado hits some not-too-sparsely populated area, as one does every few years?) And some are one-time items: it's all very well to point at ORNGE and E-Health, but (a) they're in the past and (b) they're over. (And E-Health was small change compared to the really big computerization / health care fiascos, like the one in the UK).
But even if a magic Revenue Fairy were to drop 2 billion dollars on the Ontario Government via "efficiencies", how much would go to transit? Is transit more important than all those other underfunded areas?
So, no funding through "efficiencies", or not enough. The only way to fund it is to raise revenues. What we probably should be doing is raising most of the additional revenues we need by the most general mechanisms possible, like the HST (suitably adjusted to avoid regressive effects) and income taxes. The cost overheads of collecting incremental increases are low, equitable effects are easier to achieve. The Fords of the world may proclaim that people can't afford any more taxes, but people who casually take vacations in Florida can, in fact, afford to pay more. (Ontario has no tax bracket between 78,000 and 500,000 (the health premium has a level at 200,000 but not 500,000) ; if it introduced brackets at, say, 200,000, 300,000 and 400,000 it could raise rather more from people who could "afford it"). (There's an argument for some revenue tools in terms of their discouraging unwanted behaviours (e.g. a surtax on gas guzzlers), but as my Income Tax professor used to say, tax codes are a poor way to provide incentives: direct subsidies and regulation is more effective and ends up with a lower overhead).
The problem with (re-)raising general revenues is political: it hits everyone, and many people object to paying more money for benefits which don't affect them except maybe indirectly. Redistribution has become a bad word, even though there are all sorts of studies which show that broadly redistributionist policies which lower the GINI index benefit everyone. The idea of increasing taxes targeted to areas where people see an immediate need gets more support, which is why there's the current debate over transit-oriented tools, and why the Liberals added a health-directed surtax a few years ago. (The surtax is not actually directed directly to health funding -- it's general revenues; but given the size of the health chunk in the budget, it's reasonable to treat it as though it is.)
User fees, by the way, are a non-starter: partly because effective public transit from a policy perspective requires a low-fare barrier (transit users skew to the less well-off, and the benefits in reducing gridlock can be maximized only by making transit both reasonably comfortable to take and reasonably cheap), and partly because everyone benefits from effective transit in reduced gridlock and better traffic flow. Those costs which are estimated to accrue to gridlock in the Toronto area are broadly spread around, showing up (e.g.) in the cost of goods (via increased transportation costs).
So, yeah, "revenue tools" with a regional application and a dedicated application to transit. It's not what an economist or a tax lawyer would advise, but it seems to be the only marginally workable political answer to the problem.
I'm seeing pushback on the issue of revenue tools for public transit in the GTA which seems to boil down to "2 billion a year is a small part of the provincial budget. Surely they can find it through efficiencies or reallocation?".
Well, they can't. Maybe in a world in which no Harris tax cuts had taken place, but not here and now.
Most of the Ontario budget is tied up with education (mostly schools, some universities -- 18.9%), health care(38.3%), Children's Services(11.2%) and interest on the debt (10.6%). Much of the rest is tied up in fixed costs and programs such as welfare (Ontario Works, in newspeak). Even the courts take 4.1 Billion (3.2%).
When I look at the news, I see signs of all these areas being under considerable financial stress. Hospitals are struggling to meet their budgets; the TDSB has just been fingered as diverting most of a flow of funds intended to help disadvantaged children into general revenues to make ends meet, and universities are strapped for funds; the courts have unacceptable backlogs. It has been big news that the most recent budget has made the first structural improvements to Ontario Works since the Harris years.
Plus, the Ontario economy is still faltering, relative to the strength it had for decades, so revenues are not as high as they might be.
There are, of course, always inefficiencies, though fewer than some people might think. Some "inefficiencies" provide needed redundancies to allow systems to be able to handle variations in need that can surge unpredictably. (How much do we have to provide in the way of space capacity in case H7N9 starts to spread? How much would it take to clean up after a tornado hits some not-too-sparsely populated area, as one does every few years?) And some are one-time items: it's all very well to point at ORNGE and E-Health, but (a) they're in the past and (b) they're over. (And E-Health was small change compared to the really big computerization / health care fiascos, like the one in the UK).
But even if a magic Revenue Fairy were to drop 2 billion dollars on the Ontario Government via "efficiencies", how much would go to transit? Is transit more important than all those other underfunded areas?
So, no funding through "efficiencies", or not enough. The only way to fund it is to raise revenues. What we probably should be doing is raising most of the additional revenues we need by the most general mechanisms possible, like the HST (suitably adjusted to avoid regressive effects) and income taxes. The cost overheads of collecting incremental increases are low, equitable effects are easier to achieve. The Fords of the world may proclaim that people can't afford any more taxes, but people who casually take vacations in Florida can, in fact, afford to pay more. (Ontario has no tax bracket between 78,000 and 500,000 (the health premium has a level at 200,000 but not 500,000) ; if it introduced brackets at, say, 200,000, 300,000 and 400,000 it could raise rather more from people who could "afford it"). (There's an argument for some revenue tools in terms of their discouraging unwanted behaviours (e.g. a surtax on gas guzzlers), but as my Income Tax professor used to say, tax codes are a poor way to provide incentives: direct subsidies and regulation is more effective and ends up with a lower overhead).
The problem with (re-)raising general revenues is political: it hits everyone, and many people object to paying more money for benefits which don't affect them except maybe indirectly. Redistribution has become a bad word, even though there are all sorts of studies which show that broadly redistributionist policies which lower the GINI index benefit everyone. The idea of increasing taxes targeted to areas where people see an immediate need gets more support, which is why there's the current debate over transit-oriented tools, and why the Liberals added a health-directed surtax a few years ago. (The surtax is not actually directed directly to health funding -- it's general revenues; but given the size of the health chunk in the budget, it's reasonable to treat it as though it is.)
User fees, by the way, are a non-starter: partly because effective public transit from a policy perspective requires a low-fare barrier (transit users skew to the less well-off, and the benefits in reducing gridlock can be maximized only by making transit both reasonably comfortable to take and reasonably cheap), and partly because everyone benefits from effective transit in reduced gridlock and better traffic flow. Those costs which are estimated to accrue to gridlock in the Toronto area are broadly spread around, showing up (e.g.) in the cost of goods (via increased transportation costs).
So, yeah, "revenue tools" with a regional application and a dedicated application to transit. It's not what an economist or a tax lawyer would advise, but it seems to be the only marginally workable political answer to the problem.
