AECOM
Regional Municipality of Waterloo
Regional Transportation Master Plan
Fuel taxes are an example of a transportation-based tax levy, which is collected by the federal and provincial governments in Canada. This method of revenue generation is good in that the revenue is aligned with usage of transportation infrastructure, but recent increases in vehicle fuel economy standards is making this a less effective revenue source. Since fuel taxes are levied at the provincial and federal levels, the money collected flows to general revenue funds and is not dedicated to transportation infrastructure. One exception to this is the Road and Public Transit Infrastructure Fund announced in 2010 Quebec Budget, which will collect revenues from province-wide fuel taxes and dedicate those to transportation infrastructure financing. The fund will be set up as a ―trust fund approach‖ and must generate sufficient revenues to match planned spending levels for roads and public transit. In response to requests from municipalities across the country, the federal government initiated the Gas Tax Fund to support environmentally sustainable municipal infrastructure projects that contribute to cleaner air, cleaner water and reduced greenhouse gas emissions. This dedicated fund provides predictable and long term infrastructure money to Canada's cities and towns to be used for investments in: Public Transit; Drinking Water; Wastewater Infrastructure; Green Energy; Solid Waste Management; and Local Roads and Bridges.
Municipalities can pool, bank and borrow against this funding, providing significant additional financial flexibility. Municipalities are required to report on their use of the funds' activities on an annual basis. Dedicated municipal fuel taxes have been implemented in some Canadian jurisdictions to help fund transportation infrastructure. The 1.5 cents / litre fuel tax in Greater Montreal (rising to 3 cents / litre under 2010 Quebec Budget) is used to fund public transit for the Montreal region. A similar program in British Columbia enacted a fuel tax of 15 cents / litre in Greater Vancouver to fund TransLink, the agency responsible for delivery of inter-regional transportation infrastructure and services for the Greater Vancouver area. Approximately 28% of the 2010 TransLink budget is funded by this dedicated fuel tax ($319 M out of $1.146 B annually). This type of dedicate fuel tax is most effective for larger geographic areas (or areas where untaxed fuel sources difficult to access). Municipalities in Ontario do not currently have the authority to collect dedicated fuel tax revenues. Taxes on non-residential parking spaces are another form of direct tax revenue that is used to fund transportation infrastructure in some jurisdictions. Greater Vancouver has implemented parking sales taxes that represent 21 per cent of parking rates in the South Coast BC transportation region as of January 2010. This revenue stream is used to fund 4% of the 2010 TransLink budget ($47 M annually). This type of parking tax measure is also available to the City of Toronto, under the City of Toronto Act, but the same provisions are not available to the Region of Waterloo or area municipalities in the Region. 8.2.2
User Charges
User charges for transportation infrastructure have been used across Canada to fund municipal transit and commuter rail operations for years. Transit organizations in major Canadian urban centres cover between 50% and 75% of their operating costs through the farebox. On average, the operating cost recovery for Ontario transit agencies is about 67% (or 63% without TTC), based on 2006 data. In the Region of Waterloo, the operating cost recovery ratio for 2009 was 37%.
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