Ways to Pay
Freedom of movement doesn't have to be a pipe dream
Fare free transit could be a wonderful thing for our city. I’ve said it before and I’ll keep saying it. But this time, I’m going to cost out how to do it.
First, just imagine the feeling if it was free to move around this city on transit anytime and anywhere. Imagine public transit that is free of turnstiles and other barriers to entry. Free of conflict over fares between transit personnel, security staff and riders. Freedom to travel even if you leave your wallet at home, forget to top up your Presto card, or can’t afford to pay for your next ride.
I have written of the benefits and possibilities of free transit both during and after my previous campaign. And I’ve listened to the objections. Most objections have started with “the TTC needs revenue to operate” argument, which I agree with. But the belief that it is impossible to generate that revenue anywhere other than the fare box is what I dispute.
Those objecting to free transit on principle forget that public transportation is as important and fundamental to a society’s functioning as public sidewalks and roads, public schools or public parks. It makes sense to charge individuals for private goods, since the benefit accrues solely to the purchaser. If you buy a car, house, or giant tv, only you get the benefit from that product. But if you use a public sidewalk, road or transit to get around, all of which require investment and maintenance, the benefit doesn’t go only to you. The benefit is for the places you are going. Where you are going includes the bank that profits from your deposits. The grocery store where you buy your food. The entertainment industry that sells you theatre or game tickets.
Societal benefits acccrue from your use of public transportation as well. Children are cared for by the daycare workers taking the bus. Older adults are able to stay home longer thanks to the caregivers who come to their homes. A healthier society results when people can get to their health care providers. And, our environment benefits as transit users save energy, reduce waste, improve air quality, and minimize land needed for transportation.
If the previous points make sense to you, it’s time to look at ideas of how to do it. So let’s first look at how much money we’re going to need. Almost $50 million of our fares never get used by the TTC, they are commission on Presto, paid to Metrolinx. So we don’t need to replace that money if we drop fares. The rest of our fares comprise an amount that is variable each year depending on ridership. During the height of COVID in 2020 the city lost $700 million in expected revenue.
Trying to operate the TTC replacing only the $200 million it got from riders in 2020 would not be enough. So let’s be generous and say we need to find the $900 million which the TTC receives from the fare box in a good year.
Here’s my back of the napkin proposal. But unlike other such campaign ideas that are great slogans but turn into boondoggles when their proponents don’t look at evidence after the election, I’m not wedded to mine. I put it forward to get the ball rolling on the discussion of how we can get to fare free transit. If there’s a better idea out there, I want to hear it!
My proposal is that we either increase, or preferably reallocate, existing taxes to go towards transit. Remember that along with the tax increase (or reallocation) comes a big drop - no more tax at the turnstiles.
In my proposals I give a very approximate cost if each tax option were responsible on its own for covering the shortfall. But a far more reasonable and palatable way to go about this would be to use a combination of the first three options, with a fourth non-tax option to add supplemental funding.
Increase or reallocate Homeowner and Multiresidential Property Tax
To cover the entire TTC fare revenue, we’d need to generate around $1500 per household through either a property tax hike or a reallocation of existing property tax. It’s a big figure but not an impossible one, considering regular riders pay $1700 per year to ride the TTC. We’d be transferring the cost of the TTC from the rider to the householder. You would be hard pressed to find a household that doesn’t have at least one member of their household, or employee of their household, using the TTC. And this number could come down for single unit homeowners if we increased the tax for multi-unit residential ones.
Increase or reallocate Hotel Municipal Accommodation Tax
Tourists and tourism as a whole would benefit from free transit. It makes travelling around the city easy for both business and leisure travellers alike. Anything that improves Toronto’s attraction to visitors increases opportunities for hotels. If we used the hotel tax to replace the entire fare revenue stream, it would add $140 per night to the cost for a hotel room. It’s a lot, and likely not an option I’d ultimately recommend on its own. But asking visitors to contribute towards the cost of the system instead of paying at the turnstiles is a reasonable option.
Increase or reallocate Commercial Building Tax
Large Toronto employers and institutions are perhaps the biggest beneficiaries of public transit. Without it, they’d have no access to all those minimum wage employees who can’t afford a car, or be forced to spend big money on land and construction for parking lots. To generate enough revenue through commercial tax alone, Toronto would need to get $300,000 per building since there are only around 3000 commercial buildings in Toronto (by comparison, a 1300 square foot vacant lot downtown currently could expect to be taxed around $750,000). If we further adjusted the rate by calculating it per employee, then banks and large chains with thousands of employees and expensive properties would pay the bulk of the amount, while small owners would have a more affordable rate.
Make a charitable arm of the TTC
I love our public libraries and use their services frequently. Because I appreciate what they do so much, I regularly donate to the Toronto Library Foundation, which supplements the base work of the libraries. Why not offer people the ability to donate to the TTC? Since donations are variable each year, they could not be entirely relied on to cover the 900 million dollar budget. But they could go towards extra projects on the TTC that would enhance ridership, like transforming subway cars into moving art galleries instead of advertising vehicles. The foundation would be able to use participatory budgeting, and people could choose to donate for TTC amenities that they want.
A proposal to make Toronto transit free of mandatory fares is no small suggestion. It requires a complete shift of mindset, and an openness to change. This proposal is not one that any mayor, no matter how strong, can implement on their own. And the last thing we want is to have government impose costs that will unduly burden homeowners, or disincentivize business, tourism or housing. But if it’s worked on collaboratively and carefully, one day we will have free transit that is a win for us all.
Sources:
Number of households in Toronto
Number of commercial buildings in Ontario (from which I guessed the number in Toronto)