Increased Benefits To Families? Not So Fast

I recently read a report published by The Conference Board of Canada, titled “Where The Rubber Meets The Road: How Much Motorists Pay For Road Infrastructure”. While I recall seeing this report in October 2013, for whatever reason it failed to adequately capture my attention until 3 months later. The synopsis of the document is that motorists largely already pay a sufficient amount back towards the cost of maintaining the road network in Ontario, and do not receive significant subsidization. By the calculations presented in this report, if you add the taxes and fees people pay to drive, and compare them to the estimated costs of maintaining the road network in Ontario, drivers pay something like 70-90% of recovery costs.

While drafting this post, I discovered an article that refuted these points. Written 3 months earlier in July 2013, the article called “News flash for drivers: Cyclists are helping subsidize your ride” includes examples of how taxes actually work, and is worth a read. The post I’ve written largely mirrors these points: Fuel taxes and fees that motorists pay are not direct sources of revenue for road infrastructure. For people who drive to say that they (alone) pay for the roads is a fallacy.

The Determination of Revenue and Expenses

The detailed calculations carefully put together in The Conference Board of Canada report do not seem to show how revenue is actually collected, used, and how transportation expenses are paid for, in the service of our Ontario roadways. It is true that drivers pay taxes that are unique to them for the privilege to drive, such as Fuel and Gasoline taxes. The error lies in suggesting that they in any way supply direct revenue for the building and maintenance of the roads that cars drive on. The coffers that fund all provincial programs, including health and education, also fund highway expenditures. Calculating a ratio against the fuel taxes is no more relevant than comparing to revenue generated by cigarette, or LCBO tax collection. In Brampton, where I live, The provincial “Gas Tax” revenue is used as a grant to the municipality. Instead of paying for roads, it helps to subsidize Brampton Transit. The federal gas tax on the other hand,  which must spent on capital expenses, gets split between road resurfacing and transit bus replacements.

The publication includes costs of municipal roads and associated policing into the overall provincial cost. This is also erroneus: Municipal roads are paid for by property taxes in that municipality. If you drive in any municipality in which you do not live, then you are not paying for those roads. Unless you are evaluating the budget for the municipality you live in, the cost of maintaining and policing roads is irrelevant to Ontarians. The publication notes that the “estimate does not allow for any allocation of costs to non-users. Moreover, the results mask the issue of the imbalance of revenues and expenditures by level of government. The federal government collects a significant portion of the revenues but owns and maintains a relatively small portion of the road network, whereas local governments find themselves in the opposite situation.”

So, what does this all mean? Are road users subsidized? Or do they mostly pay their own way? Municipal property owners, inclusive of those who prefer to take transit or bicycle, pay for their municipal road networks—everyone who drives into a municipality they do not live in, are driving on roads they did not pay for. Every highway in Ontario is paid for by Ontarians through taxation, whether they drive or not. When you consider how many Ontarians outside the GTA are not using the highways within the GTA, you have to ask yourself: Who’s subsiding who?

Inherent Bias

This section is more of an aside, but something that I nonetheless found annoying interesting.

At the opening of the report, it states under Acknowledgements that “The authors thank Teresa Di Felice and Christine Allum of the Canadian Automobile Association South Central Ontario (CAASCO) for initiating and defining the research and research questions…The Conference Board also acknowledges the CAASCO for financially supporting this research. In keeping with Conference Board guidelines for financed research, the design and method of research, as well as the content of this report, were determined solely by the Conference Board. The Conference Board of Canada alone is responsible for the report’s methodology, scope, and findings.” While The Conference Board of Canada claims to be “Objective and non-partisan.” They are “Funded exclusively through the fees we charge for services to the private and public sectors.”

This doesn’t quite pass the sniff test for me. The Conference Board developed “the design and method of research, as well as the content of this report”. But the first thing you have to ask is, what are they designing for? What are the questions? Who’s asking them? The CAASCO is asking the questions, and funding the project.

Actually, perhaps that is not entirely accurate. After all, who or what is the CSSASO? “CAA South Central Ontario has a long-standing history as an innovative leader committed to meeting and exceeding the needs of Canada’s motoring and travelling public” (emphasis added). CAA is funded by many, many people who are light-duty vehicle owners. That the report concludes that “Light-duty vehicle users cover a significant portion of road infrastructure costs” is likely not a coincidence.