Regional Mayors Transportation and Transit Plan

Cut Congestion Better Service More Buses and Rapid Transit

Funding Backgrounder
A new regional revenue source generating at least $250 million per year is
required to pay for the regions share of the Mayors Transportation and Transit Plan.
POTENTIAL NEW FUNDING SOURCES

The mayors and the Province agree that new funding sources
must be:
Affordable for families
Balanced between different sectors of the economy
and society
Linked to transportation and transit system use and benefits
Stable and resilient over time
Able to keep pace with growth
Economically efficient and minimize any negative impacts
on the economy
Based on these criteria, the mayors considered the following new
regional funding sources:
1. Mobility pricing on roads (such as tolling, distance
or usage-based fees)
2. Increase to the Provincial Sales Tax within Metro Vancouver
3. Land value capture
4. Annual vehicle registration fee
5. Increase to the BC carbon tax within Metro Vancouver
The Mayors Council studied these funding sources to determine
which option best met the criteria above. The mayors met with
business, environmental, labour and other stakeholder groups, and
conducted public opinion research to understand a broad range of
interests, opportunities and potential concerns.

WHY THE REGIONS MAYORS SELECTED AN INCREASE

TO THE PROVINCIAL SALES TAX IN METRO VANCOUVER

The Mayors Council is committed to implementing comprehensive

mobility pricing on the road network as the most fair and effective
way to reduce congestion however it requires 5 to 8 years to
implement. Land value capture does not generate sufficient funds
on its own but could be a smaller supporting source.
Of the remaining three funding sources, an increase to the
Provincial Sales Tax was found to be the most fair, the most
affordable for all households but especially lower income
households, the most positive for jobs and the economy,
and the most efficient to implement and administer.
Of the other options examined:
A vehicle fee would solely rely on drivers to fund the plan
and would put a greater financial strain on some families.
A regional carbon tax would target vehicle owners and
homeowners and businesses who use fossil fuels for heating
and other energy needs.
MOST FAIR: A small increase to the Provincial Sales Tax
was found to be the fairest because everyone pays, including
residents, businesses and visitors to the region, just as everyone
benefits from the transportation and transit system.
SHARE OF REVENUE PAID BY HOUSEHOLDS IN METRO VANCOUVER
% Paid by Visitors
% Paid by Businesses
% Paid by Households

PROPOSED FUNDING SOURCE

The Mayors Council has selected a

small increase to the Provincial Sales Tax
of one-half percentage point (0.5%) within
Metro Vancouver as the preferred
funding source.

20%

20%

80%

80%

Vehicle
Registration
Fee

Fuel
Tax

5%

45%

45%

45%

55%

55%

50%

Carbon
Tax

Property
Tax

Regional
Sales
Tax

Have Your Say Provincial legislation requires a referendum within Metro Vancouver to approve new regional revenue sources for

transportation investment. This referendum will give Metro Vancouver residents the opportunity to vote on this funding option as a way to pay for
the proposed the new transportation investments outlined in the Mayors Council Transportation and Transit Plan.
Funding Backgrounder

December 2014

Funding Backgrounder

December 2014

MOST AFFORDABLE FOR ALL HOUSEHOLDS: As a

comparison, to deliver the regions share of the Plan using one
or a combination of the funding sources, the average household
would pay about:
$125 per year with a regional increase to the Province
Sales Tax of 0.5%; or
$230 per year with a $170 registration fee per vehicle; or
$230 per year with an additional $40 per tonne to the
BC Carbon Tax; or
$215 per year with an additional $15 per tonne to the
BC Carbon Tax and a $90 vehicle registration fee
MOST AFFORDABLE FOR LOWER INCOME HOUSEHOLDS:
Lower income households would spend upwards of 1% of their
income paying for a vehicle registration fee or an increase to the
Carbon Tax. In contrast, households earning incomes in the lowest
20% would pay less than $50 per year on the increase to the PST
and no household would pay more than 0.2% of their income. This
is partly because many basic necessities (such as food, shelter,
childrens clothes, medicines, and transportation expenses) are
exempt from the PST and these tax-exempt necessities account
for a higher share of expenditures in lower income households.
MOST POSITIVE IMPACT ON JOBS AND THE ECONOMY:
Economists at HDR Consulting and InterVISTAS Consulting did
an in-depth review of the economic impacts of the investments
in the Plan and the various funding options considered by the
Mayors. They concluded that the Mayors Plan will result in
positive economic impacts for the region. They found that of the
available funding options, a small increase to the Provincial Sales
Tax results in the most positive net impact on regional GDP and
job growth. This is in large part because the costs are so evenly
distributed across households, businesses and visitors, so that no
one group is unduly burdened.

HOW WOULD AN INCREASE TO THE PROVINCIAL SALES

TAX WITHIN METRO VANCOUVER WORK?
Purchase of all provincially taxable items in Metro Vancouver
would be subject to an additional one-half percentage point
(0.5%) increment on top of the existing Provincial Sales Tax.
There would be no impact to the federal Goods and Services Tax.
Purchases in the region would still be subject to the same
exemptions as apply today.
No tax would be paid on:
Food
Childrens clothing
Transportation expenses (bicycles, transit, taxis,
trains, ferries, airlines, fuel, parking)
Prescription medications, household medical aids,
vitamins, and massage therapy
Books, newspapers and magazines
Repair services
Professional services
Admissions and memberships
Sale of real estate
Goods purchased for resale or export
Goods used in the manufacturing or production
of an end-use product
For example, this increase in Provincial Sales Tax would add $3 on
the purchase of a $600 living room couch, $5 on the purchase of a
$999 laptop computer, and $150 on the purchase of a $30,000 car.
WHEN WOULD THE INCREASE COME INTO EFFECT?
If voters in Metro Vancouver support this option to fund the
Mayors Transportation and Transit Plan, the increase to the PST
would come into effect on April 1, 2016 at the earliest.

Delivering the Mayors Plan

with this Funding Option

Annual Increase in
Regional GDP

Annual Increase in
Regional Jobs

0.5% increase to PST in

Metro Vancouver

$820 million

7,000

For more details on the Mayors Council Transportation and

Transit Plan, visit: mayorscouncil.ca

$170 vehicle registration fee

$780 million

7,000

$40 per tonne increase to

$290 million
Carbon Tax in Metro Vancouver

2,000

Contact Karen Cook

media@mayorscouncil.ca

One million more people will live and work in Metro Vancouver by 2040. The regions mayors worked together to develop a comprehensive plan
to reduce congestion on roads and bridges, and to provide more transit to communities across the region. The Plan will:
A
dd more bus service,

including more
SeaBus service
NightBus service
HandyDART service

Increase

 service on

M
aintain and upgrade

Build

 a Millennium Line





FOR ADDITIONAL INFORMATION:

SkyTrain, Canada Line

and West Coast Express
Bring new rapid bus
(B-Line) service to
11 routes
Website
Email

the regions major roads

Build a new Pattullo Bridge
Build two light rail transit lines
in Surrey and the Langleys

mayorscouncil.ca
media@mayorscouncil.ca

tunneled extension along the

Broadway corridor in Vancouver
Invest in walking and
cycling facilities