March 4, 2015

The Two-Hundred-Million-Dollar Coincidence

Keep in mind this number: a base amount of $200 million.  That (plus many millions more) measures three separate things – but together they say a lot about our perceptions and priorities.

 

AMOUNT TO BE RAISED BY 0.5 PERCENT INCREASE IN SALES TAX:

$250 million

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It is estimated the tax increase would raise $250 million per year to fund the mayors’ plan to spend $7.5 billion on regional transit improvements over the next 10 years.

 

* * * * * *

AMOUNT TRANSLINK HAS SAVED SINCE 2012:

$240 million

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That $240 million is a result of reduced costs and increased revenues to maintain current service levels and system investment.  Some trade-offs impacted customers and staff, such as reallocating services and reducing recovery times.

Examples:

  • $90 million through cuts to administration and operating costs
  • more than $25 million in savings on goods and services
  • $45 million in revenue

* * * * * *

AMOUNT RICHEST 2 PERCENT OF BRITISH COLUMBIANS WILL RECEIVE IN A TAX DECREASE:

$230 million

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During the budget briefing, Finance Minister De Jong confirmed there are no plans to bring in legislation to extend a tax rate increase from before the last election, delivering a tax reduction to the highest income-earners.

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The first we vote on, the third is automatic, the second hardly anyone knows about, or dismisses.

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  1. One of the tools of effective propaganda is to keep the focus of public attention where you want it. In this case, on the transit referendum, where it has been turned into a TransLink popularity contest. Hide the rest.

  2. Dare I suggest that most of that top 2% live in the area where the proposed sales tax increase would take effect? So most of the required funding is:
    1. already being collected in an efficient manner
    2. comes from the part of the province where the new, more expensive to collect tax would come from
    3. comes from those most able to pay rather than from those feeling the squeeze from taxes all around, higher MSP, higher food costs, the highest fuel prices in NA, etc.

    If Plan B was to simply scrap the upcoming tax cut then it would be reason to vote No, but we all know that’s not going to happen and that the real Plan B is more highways, putting the cost of transportation on individual citizens rather than government.

    1. Not when there are more road accidents, litigation, health care, emergency services and environmental remediation. These are already heavily subscibed to public funding.

  3. Former CEO Pat Jacobsen on Plan B (phone interview for my next Business in Vancouver column): “A No vote will do nothing to improve TransLink. It will be very difficult to find a new [permanent] CEO. TransLink will be unable to maintain its aging physical plant. It will continue to lose public confidence, and it will spiral downwards.”

  4. “Plenty of Plan Bs” means no Plan B. It means no negotiation, no consensus, and no defined course of action. A proliferation of schemes does not make planning stronger: it means it has not been done.

    Which is fine if your Plan B is more roads, as Mr Price suggests. More cars and more roads is *always* Plan B: transit is lucky to get a plan at all. Indeed, I can’t recall a previous occasion when there was *ever* a funded plan for Metro Vancouver. What makes you think another one will show up so soon? In the telephone town hall last night, the mayors of PoCo and New West said that if this vote fails they will have to go back to the drawing board. They anticipate the delay before they even reach this point will be at least four years.

    They also said that a No vote would likely lead to fare increases. Less funding leads to worse service, which leads to declining public support, increased calls for cuts and a vicious spiral.

    Look at the situation Translink’s namesake in Northern Ireland is in. From a February 27 article in the Belfast Telegraph: “There has been a furious backlash from commuters, who believe Translink could have done more to offset the need for hikes by trimming other costs, including senior officials’ wages.” An MLA commented, “I’m very concerned that the board of directors at Translink has not been vigilant in scrutinizing all expenditure.” Sound familiar?

    Today’s BBC headline: “Translink ‘could go out of business'”: “unless it increases fares again or makes cuts to services.” “Translink estimates a loss of £14m . . . it wanted an (average) 10% rise in fares this year, but the minister responsible opted for less than 5%.” “There’s a leaked document released by the chief executive of Translink stating that there’d be 20 local town services would have their buses cancelled, stopped entirely,”

    Imagining taking multiple plans to a venture capitalist. “If our plan to sell out to Google doesn’t work, we have plenty of Plan B’s: social software, video games, business intelligence, big data, mobile apps – the list is endless!” Lots of possibilities is not a plan: it’s the opposite of a plan.

    1. The proposed plan is a band-aid, not worthy of a Metro-plex of soon 3.5M people !

      To get people out of their cars we need more RAPID transit. The new plan fails on that front. The newly proposed plan is merely a band-aid. The currently proposed transit plan is far too bus based and car use will remain far too cheap for any significant changes to happen in MetroVan.

      For example: With the viaducts soon gone, we need a subway along Hastings, to Burnaby, then looping to N-Van over Second Narrows bridge along Marine Drive all the way past Lonsdale to W-Van’s Ambleside. The proposed Broadway line ends far too soon at Arbutus, especially with the federal & native land being developed on Jericho barracks. It has to go to Alma at the very least, then cheaper above ground all the way to UBC. 41st needs a subway, possibly extending to UBC to make it a full loop eventually. Langley need a train to connect to Surrey. Lionsgate bridge needs widening with a ped path and rail link on it to complete the North Shore subway loop into downtown. Then, and only then, will N-Van and W-Van folks switch from cars, especially if each car crossing will cost $10 in rush-hour or $5 outside of rush hour. This vision is nowhere in the band-aid plan.

      Highrises get built and levies collected to fund overpaid civil servants in the planning departments or elsewhere in the vast city bureaucracies but far too little infrastructure is developed. The cities then have their hand out to the province lamenting: we need more roads and especially transit – look at all these people coming.MetroVan councils have increased spending over 50% the last decade, well above inflation plus immigration due to excessive unionization and lack of outsourcing or other cost control measures.

      This is a major issue, and at the core of the city-province dispute over funding, not just for transit but also education (loads of ESL requirements – see teachers strike), healthcare (not enough funding for nurses & doctors to be hired), homelessness (rents are too high as immigrants with money crowd out folks that live here on low wages) or crowded community centers.

      Let’s look at in-migration, the main cause of this congestion: What is the rational behavior of a rich or even merely affluent immigrant ? Buy a huge mansion or condo with the best views in town, as capital gains are not taxed and property taxes are so low, and shift income to abroad ie from his foreign owned corporation, or just have the wife and the kids here and husband works abroad, i.e. very little PST and almost no income taxes are paid in BC ! Plus buy a fat car as gasoline taxes are quite low and roads are not tolled. That is rational behavior, we see by the ten’s of thousands per year in BC, primarily Vancouver & Richmond but also elsewhere to a somewhat lesser degree. The new transit plan does not change this rational behavior one iota. As such: we need a better plan on the expense reduction, the funding and the spending side !

      The tax system needs some major re-jigging in BC: far higher road use fees (at choke points say bridges, tunnels, major intersections), far higher land transfer taxes, say 1% per $1M to 15% (like UK or Hongkong), far higher property taxes (up 100%, say over 10 years), coupled with a credit for BC income tax payers, plus far higher parking fees on every residential road, plus perhaps a luxury tax for vehicles over $50,000, plus gasoline taxes that are 100% higher.

      A mere 0.5% PST increase is a drop in the bucket and will not systemically change things in MetoVan .. with more (slow) buses as it will not shift the rational behavior.
      Which politician has the guts to be honest with citizens, then tackle that on the city or provincial level ?

      I am happy to pay 10% PST or any of the above taxes or fees if I get something of value. I do not today, and neither do 600,000+ other car users who will thus oppose this band-aid “decongestion” plan as it will not achieve what it is intended to do, namely shift car users to transit. Only far more RAPID transit coupled with higher car use costs will achieve that.

      I urge both MetroVan mayors and provincial political leaders to come to their senses as opposed to snow ball their voters with more lies and band-aids ! Soon 3.5M people deserve a world class RAPID transit not mere band-aids !

      1. I agree with a number of your ideas. I too would be happy to pay 10% PST for rapid transit. But you seem to want a revolution. That ain’t the system we got. It does not matter how well-thought out, efficient or wise your plan is: what you propose cannot realistically be done with the politics we have.

        One of the scariest aspects of this whole fight is the widespread rejection of politics. People don’t want to debate, to acknowledge differences, to compromise: they want someone to impose the Truth and Make It So. That is really rather terrifying.

        I don’t think a revolution would be a good thing. In a democracy I believe we need to bring citizens with us, not impose on them what we think is right. Technocrats inevitably get it wrong or do terrible things. Five Year Plans and all that. But this is beside the point. It ain’t gonna happen. We need to muddle through.

        If that’s where you want to be, the only way to get there is to build support. You see this from a technical perspective as a band-aid. It’s not. The symbolic value of a community putting its money where its mouth is and making a long-term commitment to transit is perhaps even more important than the impact on transportation logistics.

        This vote will be a declaration of who we are, for better or for worse. That is where politics comes from: from identity and shared values, not from rational calculations of efficiency or self interest. We have a choice between making a first step, or making no step. There is a world of difference between the two.

  5. I worry that including the Translink cost saving weakens the rhetorical power of this, since (by my reading of the above) it is not the case that Translink’s ANNUAL budget is $200m smaller, but it IS the case that a) the provincial tax take will go down by $200m thanks to the abolishing the $150k marginal tax rate, and b) it is the case that metro vancouver’s tax take will go up by $200m from PST.

    I phrased it this way on my Facebook post to friends:

    If we don’t vote to fund the income tax cut for the rich by increasing sales tax on everyone, then we don’t get frequent buses. Thanks Christy.

    If you live in BC, you pay a 14.7% tax rate to BC on anything you earn over $106,000 a year. If you’re lucky enough to get your earnings up over $150,000, you pay 16.8% on anything over that. http://www.taxtips.ca/taxrates/bc.htm

    That little extra 1.9% tax on income over $150,000 brings in $230m a year.

    If that total figure sounds familiar, it’s because it’s about the same amount increasing PST by 0.5% would bring in each year. That’s the amount that would fund all the frequent buses, light-rail, subways, road upgrades etc. in the mayors’ plan.

    There’s a referendum on that PST increase. But there’s no referendum on abolishing that top tax rate. http://www.canada.com/…/temporary+year+…/10818573/story.html It’s just going to happen. We have been forced to hold a costly referendum essentially to decide whether to replace a tax on the rich with a tax on everyone, and if we don’t vote for the rich, we get another decade of awful congestion.

    If we don’t vote to fund the income tax cut for the rich by increasing sales tax on everyone, then we don’t get frequent buses etc.

    In my humble opinion, that should be a much bigger scandal than it is.

    1. BC income taxes are 68% higher than AB’s of 10%. This is excessive in my opinion given that the feds take another 29% for a total take of 46.8% – almost half your income. Plus healthcare costs on top, still rising. This (taking of almost 50% of someone’s earnings) is legal in Canada ? This is moral ? And you want to increase it further ?

      Plus, you then take your 50% of earned money and when you buy stuff, say a new car or new boots, you pay another 12%, soon possibly 12.5% of it for more taxes ?

      I would rather see far higher consumption taxes (i.e. GST and PST) to reduce all the crap we import. Income taxes are generally too high in Canada, especially in BC and as such it makes sense to lower them further. Let’s also look at the expense side, please, for example excessive public sector wages too, please, 20-30% above comparable private sector jobs when counting hours worked, benefits, generous defined pensions at too early an age to age 90+ and low low risk of layoffs !