Nope, says Nathan Pachal:
Study shows 0.5% sales tax will not cause shoppers to flee to Abbotsford
LANGLEY – As the upcoming transit and transportation plebiscite inches closer, some small business owners in communities such as Langley and Maple Ridge have expressed concern that the proposed 0.5% Metro Vancouver Congestion Improvement Tax – the funding source to pay for the Mayors Council’s $7.5 billion plan to expand transit in the region– will devastate their businesses as shoppers flee to Abbotsford.
“The research shows business owners have nothing to worry about,” says Nathan Pachal, founder of South Fraser OnTrax and prolific transportation commentator.
He has uncovered a new report which shows that a 0.5% sales tax differential between Metro Vancouver and the Fraser Valley Regional District will not impact small businesses in the region, including in Langley.
Cross-jurisdiction tax evasion has been studied extensively in the US and is of particular interest to the Washington State government. Vancouver, Washington has an effective 8.4% sales tax rate, while its neighbour Portland, Oregon has no sales tax.
“People in Vancouver, Washington can simply walk across a bridge to Portland, and pay no sales tax,” says Pachal.
A new study from the Washington State Department of Revenue, called the “2014 Cross Border Study,” shows that cross-jurisdiction tax evasion varies depending on the tax differential.
The study shows that while the 8.4% tax difference results in a 25% loss in taxable retail revenue, it also concludes that a 0.5% tax difference only causes a 0.67% loss in retail sales. Based on this analysis, the impact of cross-jurisdiction tax evasion will be statistically insignificant to local businesses in Metro Vancouver.
Food and vehicle purchases represent the largest retail sales categories. Grocery stores, coffee shops, fast food joints, and restaurants are expected to be exempt from the 0.5% Metro Vancouver Congestion Improvement Tax, just as they are with the current PST.
Concerns among automotive retailers are also unfounded.
“In Washington State new vehicles are assessed state tax based on where they are registered,” Pachal states. “This means that if you buy a car in Portland, you still pay Washington sales tax.”
The BC Provincial government is expected to adopt a similar system for Metro Vancouver residents.
“The fact of the matter is that people will not drive to Abbotsford to save a few cents,” Pachal states.
“In fact, according to research commissioned by the Canadian Urban Transit Association, improved transit service will actually grow small business.”
Based on their analysis, for every dollar spent on transit, $3.30 is returned back to the economy, giving people more money in their pocketbooks which they can spend at small businesses throughout the region.
>“People in Vancouver, Washington can simply walk across a bridge to Portland,
> and pay no sales tax,” says Pachal.
Ha ha. I want to see anyone just “simply walk across” I5 over the Columbia.
Ugh. Is this a Translink study — the same group that gave us the Port Mann projections? How many other “studies” are they going to release in their favour? Anytime someone posts a study or a poll, they should post their historical accuracy rate.
As the post highlights, the study was done by the Washington State Department of Revenue looking at adjacent jurisdictions responses to sales tax differences.
It’s to be used as indicative of how residents might be expected to react to sales tax differences, but it didn’t look at Metro Van behavior specifically.
And FYI, TransLink didn’t develop the traffic forecast for Port Mann, Provincial consultants did.
You can hold TransLink accountable for the Golden Ears Bridge forecast if you’d like.
Kirk,
Can we expect the same accuracy rate from people like you who ignorantly rant?
Don, I’m just fed up with all the crap. Neither side has shown any competency in predicting the future. Whenever I see that Mario pollster guy on TV, I pretty much gag. Who keeps hiring him? He’s been wrong with so many MAJOR predictions. But, I guess he serves a political purpose, so someone keeps funding him.
Perhaps if you’re fed up with crappy predictions you should complain to the Provincial government who consistently and very expensively continues to get it very wrong.
If you’re going to rant, at least rant at the right people.
I keep voting them out, but the rest of the stupid province keeps voting them in. Now we’re having to listen to Clark’s crap about LNG predictions. All I hear everyday is “blah blah blah… you have to pay more”.
if indeed every $ invested in transit returns $3.3 then MetroVan should just borrow the money and start building AND lowering the sales tax from all the expected influx of cash. The crucial issue is thar car use will continue as is if its use is not made far more expensive, through licensing fees, parking fees, road tolls or gasoline levies.
In addition property taxes and land transfer taxes for non-residents or even second homes have to be increased drastically.
And finally, operating expenses, primarily salaries and benefits need a major haircut across the board.
The problem is that it doesn’t return that $3.30 to Translink – those benefits are spread out across the people and businesses in the region. The regional sales tax is the way to recapture some of it to provide those benefits.
Stories like this one remind me that the biggest challenges to the “Yes” side will be answering to an endless stream of stupid, unsupported, and largely irrelevant claims from the groups that for whatever incomprehensible reason are opposed to public transit. (Yes CTF, I’m talkin’ at ya)
The real problem though is that whatever drivel comes out of CTF, the CFIB, the Fraser Institute etc is invariably reported as if it’s fact, with no journalistic effort to actually find out if what’s being claimed has a basis in reality.
Why isn’t there a CTF-like organisation in favour of public transit? There is a huge hole in the public discourse that is just waiting to be filled, and I don’t know why nobody has organised something like this. I would be willing to donate to that.
People in the main are not opposed to public transit. Only the way it is administered by seemingly incompetent management ( translink) mayors council and unelected boards. The loading of the mayors council –who vote on a weighted basis in metro van.— By Surrey and Van who will serve their communities first At the expense of the rest of the membership is another example .
The supposition of the plebiscite that we will vote for an open ended nonscheduled open checkbox is ludicrous .
The last thing we need is yet another self interested group obscuring the problem even more.
You have clearly convinced yourself of these things, Don, but that doesn’t make them true.
But tell me, what do you suggest as a solution? Paint us a picture of how to improve transportation in the region for today and the next 30 years.
It’s funny. One day we read that tolls on a bridge are causing a drastic reduction in use and people are driving long distances to avoid the toll charge, while incurring extra costs in gas and time. The net must be very low.
The next day we read that people won’t bother driving to the next community to save if that community has a lower sales tax rate.
I just came back from the US. Even on a miserable rainy day like today, the gas stations in Blaine, Washington were doing a very nice business. The Canadian registered vehicles just kept on coming. In fact, most of the vehicles over there are Canadian. That’s why the TransLink gas tax revenue is down too.
Which is it then, will people drive to save a few pennies or not?
http://www.vancouversun.com/business/Drop+Canadian+dollar+linked+fewer+cross+border+shoppers/10752596/story.html
“During that same month in 2014, when the Canadian dollar had dropped to 86 cents US, just 222,401 Canadians re-entered the country at the same crossing. That’s a drop of about 24 per cent in a year.
Similarly, at the Abbotsford-Huntingdon crossing, the number of Canadians coming back fell from 120,595 in December 2013 to 90,764 last month, a drop of 29,828, or about 25 per cent.”
As is often the case in life, things aren’t always black and white. When the savings from crossing a boundary (or bridge) are perceived to be large, people will do it (or not do it, in the case of a bridge toll). When the perceived savings dwindle, behavior shifts.
I don’t doubt that the tax will lead to some high-price purchases in the Fraser Valley. Saving several hundred on a new car will be worth the effort (in the same way that saving $25 on filling your tank in Blaine is worth the effort….although not as attractive as when you saved $35/fill last year, as the article tries to point out). But most rational people won’t drive to FV to save $0.30 on a restaurant meal or a new pair of pants. It’s about scale.
Eric wrote: “The next day we read that people won’t bother driving to the next community to save if that community has a lower sales tax rate.”
It shouldn’t be rocket science to understand that people are more willing to go out of their way if they can save more, and less willing if they can save less. A 0.5% tax is in the “less” category for the vast majority of purchases. It amounts to a whopping 5 bucks on a $1000 spending spree. There aren’t all that many people who will go very far out of their way for those kinds of savings.
I would never drive to the states to save a few dollars. This is very unpatriotic and grossly unfair. US has low gas prices and the most expensive health “care” system in the world bar none. We have a better public health care system but higher gas taxes. We also have a great transit system which helps everyone. Those going to the states to save a few dollars are diverting tax revenue to the US and yet they expect the great services that are provided here. I am very happy to pay our taxes and provide my fair share for the services it provides.
Thank you. I completely agree, and I wish more people saw the connection between the taxes we pay here and the excellent services we enjoy as a result. There is no free lunch.
It makes you wonder what would happen if we introduced comprehensive road pricing? Judging by what a single tolled bridge does I would not be surprised if traffic went down significantly and our congestion problem would be solved…
One more question. I lived here for about 20 years. In that period Greater Vancouver’s population went from roughly 1.6 to 2.4 million. So lets say 50% increase. However, we see that car counts on major bridges have been roughly stable in that period (Port Mann Bridge, Massey tunnel, etc). No real increase. The transit and other modes have not really drastically picked up in this period of time – from 22 to 27% share (walking, cycling and transit). So my question is where are the people and why aren’t they moving around the city as much as before?
Of course people in the Langley’s will go to abbotsford for big ticket items , only common sense. Who in their right mind would vote yes for a tax that has no expiry date, that does not give spefcific dates for projects and really is just to fund the city of vancouver’s needs. Why do you think they loaded the board on the mayors council. Just vote NO and send them back to the drawing board.
This tax serves the entire region, not the city of vancouver: https://voony.files.wordpress.com/2015/01/capitalinvestment1.png
As you can see, the Surrey LRT will eat up about the same amount as Vancouver’s skytrain portion, while B-lines, the Pattulo bridge and major road improvements will mostly serve the suburbs, also taking up healthy chunks of funding.
Put it back under direct control of the ministry of transportation.
What- ever is suggested by one jurisdiction will under the present system will not satisfy another.
Non elected boards are by their makeup and nature- partisan-and mayors are only interested in their direct responsibility.. IE. the muni . they are elected to serve.
It is clearly a provincial responsibility to -administer,-seek input, -and direct what gets done and where..
We should explore financing by bond issues similar to what they do in the states.
I don’t know if you have traveled but we have- a great deal-and our present system pales in comparison to many , no make that most– of the industrialized countries in the world.
You cannot run any system by committee and certainly not by listening to the bleating of special interest groups.
As this vote presently stands the tax does not serve the entire region– if you look at the projects … the big money projects are in Vancouver and Surrey .. there is nothing in it until 2020 for the Langley’ s, and there is no guarantee that it will be done then.
Plus it is open ended…
The tax ,unlike referendums in the States ,has no expiry Date.. it will simply go on forever and will be increased at the whim of local politicians.
Greater minds than mine have the solution but the one thing i do know is that this referendum is not the answer or even the beginning of an answer.
So… you think that a vote of No will lead to the ministry of transportation assuming management of Translink?
Crazy talk. A vote of No will only lead to less investment in transit, more congested roads, and a provincial government that stands back and claims it’s what the people wanted.
Meanwhile, you’ll still be complaining about Translink, and you’ll be paying higher provincial taxes to cover off the cost of more car infrastructure – which will be much more expensive than what’s proposed in the referendum.
Take a step back and do some self-evaluation. Ask yourself, if you can’t come up with an alternative solution (because of your self-described lack of knowledge or experience), how can you possibly be so certain that this proposal is not the right one?
Have you looked at the costs of voting No? It may feel good for a brief moment, but will it accomplish anything? Play out the situation and think about what will actually happen.
On the other hand, Augustin, is voting “YES” to this proposed referendum question solely in the absence of a better “YES” option a sufficient or prudent reason not to vote “NO”? In court, when there is reasonable doubt, the jury in instructed to vote “NOT GUILTY,” so if we are uncertain that the referendum proposal is the right one, “YES” is not the wise solution. “NO” is the indicator to the government to provide better options to citizens. “YES” is definitive agreement with the one choice proposed to date. Restructuring Translink to save on costs and to allocate funding where needed would likely be a more favourable option to citizens than increased taxation. In short, there are other options that can and should be considered prior to voting “YES” to squeezing more blood out of taxpayers.
May i suggest you actually read what i said—- you originally asked for solutions.. Certainly i agree i am no more qualified than you to give solutions
rather –. i gave you some suggestions and observations
1. That transportation rightly belongs under the ministry of transportation portfolio where decisions can and should actually be prioritized throughout the province and decisions actually made. I did not say a no vote would put it there but it should.
2. That we should look at bond issues to finance specific projects.
As stated I ,no more than you– can give a solution– i can only give you observation of an adult who has traveled more than 1/3 of this world, has ridden and used public transportation all wherever we have gone.. and i am never ceased to be amazed that we have trouble putting together for example, a compass card.whereas its a simple phone app in Singapore.
We allow people to not pay on a wholesale basis, try and get past the barrier in London and not pay. difficult if not impossible…
Most major roads in China for example are tolled, many cities have congestion taxes that make it cost prohibitive to bring a car downtown.
What i am saying is that other countries have had the problems and found the solutions that we search for– yet we don’t adopt them .
You ask the question how can i possibly be so sure that the proposal is the wrong one .
I suppose i could ask how you are so sure that it the right one!
I am not a bit concerned about the cost of voting No– as it should lead to another kick at the can..
as the mayors council has stated there is no plan B.
I am very concerned that the gullible will take the easy way out and vote yes and saddle those of us who pay large amounts of tax yet another bill. One that could be avoided.
Well said, don woode.
Yes the Ministry of Transportation is a good place to lay the responsibility. Sadly we have decades of proof that they don’t really care about making the lives of their constituents better. Victoria, be they Socred, NDP or Liberal, has always been in it for the big announcements, photo opportunities, ribbon cutting ceremonies and, most importantly, the back room deals.
They take credit for everything that goes well, even if it’s in spite of their involvement, and are adept at shifting blame for anything that doesn’t come out perfectly. TransLink was created, in theory, to bring local decision makers into the game, but in practice has become the favourite scapegoat of the Minister du jour.
The MoT has never shown interest in finding out what has worked elsewhere and applying it here. Like I said, that’s not why they bother putting money into transportation infrastructure. Moving raw materials from the interior and finished goods to the rest of Canada is what matters.
No things won’t suddenly get terrible if the plebiscite fails to pass. Food doesn’t suddenly go bad just because the best before date has passed. Things will slowly get worse, transit service will get cut, truck routes will get additional lanes and life for the politicians in Victoria will go on much as before because they don’t need a single urban vote to be re-elected.
Moving raw and finished goods does matter ! Resources, the sale and movement of resources are our livelihood
It’s what pays your pension, your social benefits and your medical coverage, and provides one of the highest standards of living in the world .. just to name a few things!
The Canadian budget is composed of mainly commodities and financials and it takes truck routes , rail and pipelines to move that commodity to the rest of the world. Take a few moments and look up the members of the TSX if you need proof.
But all of this is just a digression from the real issue .
An unwanted, unfair and unnecessary tax that can and should be avoided.
Failure of the plebiscite is an opportunity- not a loss– in that it will provide the opportunity to rethink, retool and restructure trans- link to be a more efficient and answerable entity than what we now have.. Vote NO