Category: 2015 Transit Referendum

Referendum Questions: What will it cost?

Update: I forgot a couple of bills that I paid in January. Please see my update below for new numbers!

One of the questions surrounding the Metro Vancouver Congestion Improvement Tax is how much it will cost the average household in Metro Vancouver. The Canadian Taxpayers Federation says $258 a year, and the Better Transit & Transportation Coalition says $125 a year. Keep in mind that those are for the average household, meaning roughly half will pay more and half will pay less.

So which is it? The actual answer is dependent on the household. Some households will buy a lot of taxable goods, some won’t buy many. I decided to take a stab at answering this specific question:

How much will I pay?

I kept all receipts for everything we purchased in January 2015. I added up the total amount we paid for taxable goods, and that came to $312.26. For those taxable goods, adding a 0.5% CIT would have cost us an extra $1.56 for the entire month.

That’s not all that we paid for that would be subject to the CIT. We are modo members, and car-sharing fees are subject to PST. In January 2015 we paid $26.10 in PST on our modo bills, which means we would have paid another $1.86 in CIT.

And we also bought a table. We bought this through a local company that makes tables, and it was a flat $1000, tax included. If you figure out what PST you’d pay to make the total tax-included amount $1000, it works out to $62.50 ($1000 / 1.12 = $892.86, 7% of that is $62.50), so we would have paid another $4.46 in CIT. This cost would probably have been eaten by the company, because they probably wouldn’t charge $1005 for a table. I only mention it because it’s an example of an expensive purchase that would normally be charged tax, but if you shop smart (and local!) you can find ways to reduce your tax burden.

So how much CIT would we have paid in January 2015?

$3.42

$3.42 for the whole month. 11 cents a day. And what would we get for that? A new bridge. A new SkyTrain line. New light rail lines. More buses. More walking and cycling routes. Less congestion.

All that for only 11 cents a day? Sign me up.

Update: I forgot my cell phone, internet, and TV bills that I paid in January. On these bills I paid a total of $18.27 in PST, which would have meant an extra $1.31 in PST. This means that in January, the CIT would have cost me an extra $4.73 in taxes, or 15 cents a day. My apologies for getting this wrong.

Referendum Myths: “It’ll cost you $258 a year”

The biggest myth being perpetuated by the Canadian Taxpayers Federation is that it will cost every Metro Vancouver household $258 every year in new taxes. That is completely incorrect, and here’s why.

First, the CTF’s math. The 0.5% Metro Vancouver Congestion Improvement Tax (which I’ll shorten to CIT from now on) will generate roughly $250 million per year to pay for the myriad improvements in Metro Vancouver’s transportation system. In 2011, the Vancouver census metropolitan area (which is pretty much the same thing as Metro Vancouver) had 891,336 private dwellings occupied by usual residents. That number increased by 9.1% between 2006 and 2011, so assuming a steady increase, that turns out to be a 1.76% yearly increase. That means that in 2015 there are roughly 955,762 households in Vancouver. Divide the $250,000,000 equally amongst all of those households and you get $261.57 per year, which is pretty close to the CTF’s $258 per year.

Now here’s why that number is wrong. The CTF is making the assumption that only households will be paying the CIT. That is wrong. Plain and simple, the CTF’s base assumption is wrong.

Visitors to Metro Vancouver will also pay the CIT. In 2014 Metro Vancouver had nearly nine million overnight visits, and tourism continues to increase (and will get better if the Canadian dollar remains weak against the US dollar). In BC, hotel stays are taxed and one can reasonably assume that the CIT will apply here as well. Total spending by overnight visitors was $4.4 billion in 2006, and if you assume that 75% of this is taxable (food isn’t, but tourists spend roughly 25% of their money on food (at least, domestic tourists in the UK do)), that works out to $16.5 million. Take that number, scale it up by 5.5% per year between 2006 and 2014 and you get about $25.3 million per year.

Okay, so 10% of the $250 million will be paid for by tourists.

What about businesses? They’re going to pay the CIT as well! I don’t have any good numbers, but the Mayors’ Council pegs this at 45%. That sounds reasonable to me, but if someone wants to make the case that this number should be substantially larger or smaller, there’s a comment form at the bottom of this post.

Put those numbers together and you end up with households paying roughly 45% of the $250 million each year, or $112.5 million per year, or $117.70 per household per year.

But! The CTF also says, of the $250 million, “…that’s a tax increase – visible and hidden – of $258 per household.” They try to sneak in this “hidden” cost, assuming that businesses will directly pass on any taxes they pay to people purchasing their products. Here’s a simple example showing that is wrong:

There is currently a gas tax of 17 cents per litre charged in Metro Vancouver. Metro Vancouver does not include the city of Abbotsford but does include Langley, which borders Abbotsford. If this gas tax is directly passed on to the consumer, one would expect that a gas station in Langley would charge 17 cents more per litre than a gas station in Abbotsford. Is that the case?

No. That image is gas prices from January 27, 2015. To the west of the red line is Langley, to the east is Abbotsford. The three gas stations in Langley average to 100.6 cents per litre, and the five in Abbotsford average to 89.9 cents per litre, a difference of 10.7 cents per litre. Either gas stations in Langley are eating six cents per litre or gas stations in Abbotsford are charging an extra six cents per litre. I suspect reality is somewhere between the two.

There are also a lot of businesses in Metro Vancouver that either don’t directly charge consumers (mining companies are a good example) or are national (such as banks) or multi-national (such as shipping companies and large software companies). How does a mining company pass on the 0.5% CIT to Metro Vancouver households? How does Microsoft pass on the 0.5% CIT to Metro Vancouver households? They don’t.

How much will Metro Vancouver households pay in CIT? Probably around $100-120 per year. That’s a far cry from the $258 per year that the CTF says they’ll pay. Again, they’re only interested in fear-mongering instead of presenting facts.

And that they use this as a major part of their campaign? Relying on weak and incorrect math to scare Metro Vancouver residents?

That’s pretty weak.

“That’s pretty weak, Jordan.”

I was on CKNW on Tuesday talking about “waste” at TransLink, prompted by my post poking holes in the “TransLink is extremely wasteful” myth. Personally I think the interview got a little side-tracked (I was expecting to talk more about the “waste” than general TransLink issues), but people have told me that I did a good job. Thanks to everybody who listened!

And after I was on, Jordan Bateman was on The Jon McComb Show to offer a rebuttal. If you listen, it wasn’t much of a rebuttal.

When Mr. McComb asked Mr. Bateman what the total amount of waste the CTF has found is, Mr. Bateman couldn’t answer, prompting Mr. McComb to say

That’s pretty weak, Jordan.

Mr. Bateman then talked about how TransLink was found to have a cost per revenue passenger about 30% higher than Victoria, Calgary, Edmonton, and Toronto’s transit system, and that this is a sign that TransLink is spending way too much money to transport people around.

Unfortunately that was thoroughly debunked in 2013.

When you consider the amount of bus service hours that are provided per passenger revenue dollar in fares, TransLink significantly outperforms Toronto and Montreal in this regard. TransLink provides more transit service per revenue passenger than other transit agencies.

TransLink can provide the same amount of service hours for just 81% of the cost as the Toronto TTC. Alternatively, for every tax and fare-payer dollar, TransLink provides 22% more transit.

Trotting out debunked numbers to make your argument? That’s pretty weak, Jordan.

And then Mr. McComb asked Mr. Bateman if the CTF is going to release a list of their contributors. Mr. Bateman hid behind an argument that he doesn’t know what the rules are and nobody knows what the rules are, saying that he’d think about releasing them. Keep in mind that they have a post about protecting the privacy of their donors so I think that Mr. Bateman was just paying lip-service to the idea to get Mr. McComb off his back.

That’s pretty weak, Jordan.

Referendum Myths: “TransLink is Wasteful”

The Canadian Taxpayers Federation released its “No TransLink Tax” platform today, and their second major point is “TranLink is an extremely wasteful organization”. As proof, they offer these six “high waste” examples:

TransLink doesn’t just have one board of directors, it has six – at a cost of $751,589 in annual salary. And after TransLink’s board chair promised executive pay would be frozen “at 2012 levels,” every single TransLink executive got paid more money in 2013.

TransLink spends at least $1.12 million on an empty building. The SkyTrain union head calls the $60,000/month lease payment “outright waste” and a “poor financial decision.”

Despite crying poor, TransLink kicked in more than $30,000 to put a 7-foot statue of a poodle on top of a 25-foot pole. The Main Street Poodle is nowhere near any major transit station, nor is the poodle symbolic of the neighbourhood.

TransLink took months to fix a glitch that saw its ticket vending machines treat new $5 bills like they were $20s. People would buy tickets and get more money back than they put in.

TransLink spent $523,000 on 13 TV screens at various SkyTrain stations. A year later, a CTF inspection showed only 4 of 13 were working. TransLink refuted that claim, saying 6 of the 13 $40,000+ TVs worked – still less than half.

TransLink spent $30,000 studying a gondola up Burnaby Mountain that neither neighbours nor City Hall supported. As Mayor Derek Corrigan said: “[If TransLink is so broke,] why are they going into additional expenses, like the gondola? It’s never been a priority.”

Let’s take a look at those one-by-one and cut some fat off of TransLink’s budget.

TransLink doesn’t just have one board of directors, it has six – at a cost of $751,589 in annual salary. And after TransLink’s board chair promised executive pay would be frozen “at 2012 levels,” every single TransLink executive got paid more money in 2013.

To be properly pedantic, TransLink only has one board of directors. However, it oversees a number of companies that actually operate buses and trains and supply policing services: Coast Mountain Bus Company, British Columbia Rapid Transit Company Ltd, West Coast Express, and Transit Police. I can only find boards for TransLink, CMBC, BCRTC, and the Transit Police, though. Apparently the CTF counts the Mayor’s Council as a board, and magically the West Coast Express has one too. Keep in mind that the Mayor’s Council is made up of, well, mayors, and mayors were elected by the people, and the CTF keeps going on about how TransLink isn’t accountable to anybody because nobody overseeing them was elected, except for this Mayor’s Council, which I guess the CTF ignores when it comes to matters of accountability but falls over themselves to include when it comes to matters of waste, but nobody ever accused the CTF of being consistent.

Anyhow, let’s take the CTF at their word. Six boards. Total cost of $751,589. Let’s cut that down to one board to oversee everything. Assuming equal distribution of funds, we’ve just saved TransLink $626,324.17.

And yes, every single TransLink executive got paid more money in 2013 than they did in 2012. You can see it in the 2013 Financial Information Act Filing and Remuneration Report. In 2013 the seven executives had a total compensation of $2,517,791, whereas in 2012 their total compensation was $2,333,799. Let’s claw back all of that increase, and we’ve just saved TransLink $183,992.

TransLink spends at least $1.12 million on an empty building. The SkyTrain union head calls the $60,000/month lease payment “outright waste” and a “poor financial decision.”

Well shit, let’s dump that! Bam, just saved $720,000 a year. We’re really finding lots of waste here!

Of course, you can’t just break leases like that without incurring penalties. But of course, that’s the real world, and the CTF would like for you to forget about that.

Despite crying poor, TransLink kicked in more than $30,000 to put a 7-foot statue of a poodle on top of a 25-foot pole. The Main Street Poodle is nowhere near any major transit station, nor is the poodle symbolic of the neighbourhood.

Let’s put that poodle to sleep and put that $30,000 in our pocket.

TransLink took months to fix a glitch that saw its ticket vending machines treat new $5 bills like they were $20s. People would buy tickets and get more money back than they put in.

Okay, this is a serious problem. Unfortunately I cannot find any hard numbers (or even soft numbers) about how much was lost here. According to this story it happened four times across the system, and in each case a SkyTrain attendant put the machine out-of-order until it could be fixed. That’s $70 wasted.

TransLink spent $523,000 on 13 TV screens at various SkyTrain stations. A year later, a CTF inspection showed only 4 of 13 were working. TransLink refuted that claim, saying 6 of the 13 $40,000+ TVs worked – still less than half.

Okay, so seven broke. That’s $281,615 wasted.

TransLink spent $30,000 studying a gondola up Burnaby Mountain that neither neighbours nor City Hall supported. As Mayor Derek Corrigan said: “[If TransLink is so broke,] why are they going into additional expenses, like the gondola? It’s never been a priority.”

Mayor Corrigan is right: TransLink shouldn’t do studies on opening up new transit routes, especially to a location that gets snowed in nearly every year, making it impossible for buses to get to. Let’s just say that’s $30,000 wasted.

Well, that’s an awful lot of waste! By my calculations that’s a total of $1,872,001 wasted. Don’t forget that a big chunk of that ($720,000) would come with penalties that TransLink would have to pay. But still, nearly $1.9 million dollars of waste!

But let’s put that into context. TransLink’s expenditures in 2013 were $1.406 billion (which was actually down from $1.430 billion, thanks to identifying cost inefficiencies). $1.872 million out of $1.430 billion is 0.13%. That’s miniscule, and it’s nearly thirteen times smaller than efficiency savings that TransLink already found.

So TransLink is already identifying areas where it can be more efficient. It’s saved $26 million from 2012 to 2013. And the Canadian Taxpayers Foundation is saying TransLink is incredibly wasteful, and their “big waste” items only come to $1.9 million? Really?

Ever heard of the phrase “trying to squeeze blood from a stone”? Or how about “scraping the bottom of the barrel”? Because that’s what the CTF is trying to do. And they’re throwing these numbers out without any context to scare people.

Look at the facts. The facts say that TransLink is already identifying inefficiencies, and there’s not much left to find. Even if all of the identified cruft and waste is trimmed (and that’s not realistic), that only gains you 0.13%, which is miniscule. Put it this way: if you make $25/hr, and you suddenly get a 0.13% raise, do you know how much you make? $25.03. An extra quarter a day.

Does that sound like an “extremely wasteful organization”?

It doesn’t to me. What it sounds like is the CTF is blowing scare tactics all around and hoping that people don’t stop to think. It sounds like the CTF assumes people are stupid and will see EXTREMELY WASTEFUL ORGANIZATION without any context, and then just parrot the CTF’s line.

The CTF thinks you’re stupid and will just eat this up. Show them that you’re not. Show them that these context-free factoids aren’t going to fool you. Show them that we don’t have to listen to their rhetoric.

The Cost of Congestion

Vancouver Sun columnist Barbara Yaffe had a corker of an opinion piece about the upcoming transportation referendum. In it she trots out the “cost” to taxpayers:

…a PST hike — estimated to cost each household from $50-$258 annually…

I’ve tried to find some numbers that back this up, and all I’ve seen is this press release from the Canadian Taxpayers Federation that states:

The TransLink mayors’ $250 million sales tax hike, spread across the Lower Mainland’s nearly 1 million households, means the average household will face an annual tax increase of about $258.

Keep in mind that nearly 9 million people visit Vancouver each year, and they’ll also be contributing to the $250 million raised, so it’s not entirely on the residents of Vancouver to shoulder the burden.

Keep in mind basic math, as well. If I’m paying an extra 0.5% tax, and the total extra tax I’ve paid comes out to $250, that means I’ve spent $50,000 per year on taxable items. The median household income in Vancouver in 2012 was $71,140, which gives a take-home income of $55,178. This means for a median income family with two children, they would have to spend only $5,178 on non-taxable things to have their PST tax burden increased by $250. Rent isn’t taxable. Mortgages aren’t taxable. Food isn’t taxable (well, most food isn’t). Is the CTF’s $258 number sensible? No.

Edit: I just realized that I screwed up the math in the above paragraph. Yes, if you spend $50,000 on taxable items you’ll pay an extra $250 in PST, if the 0.5% PST increase goes through. What I neglected is that if you spend $50,000 on taxable items you have to pay the base 7% PST, which comes out to $3500. If you’re unlucky enough to need to pay the 5% GST on all of those items, you need to pay $2500 in GST. That means that to get the CTF’s increased PST burden of $250, you’ve already paid $6000 in taxes on $50,000 of goods and services. So of your $55,178 take-home pay you’ve already spent $56,000 of that, and you haven’t even paid your housing or food costs yet. The CTF’s $250 number is an even larger steaming pile of bullshit than it was before! Math! It works!

The lower bound on Barbara Yaffe’s tax increase is $50, which sounds a little more reasonable. Now, let’s suppose that the transportation referendum gets voted down, and Translink receives no additional funding from what it already has. Vancouver’s population will continue to increase, and with increased population comes increased traffic.

The average Vancouver driver’s commute in 2010 was 25 minutes. Let’s SWAG an increase in this by five minutes. Let’s also assume that the distance travelled doesn’t increase, which means that the additional time will be spent either idling or driving at a crawl. Five minutes doesn’t sound like a lot, but that’s ten minutes a day, fifty minutes a week, or 2400 minutes per year (assuming BC, where we have 11 public holidays and 10 vacation days).

When cars idle they burn about 0.1-0.3 gallons per hour. Let’s take the midpoint of that, 0.2 gallons per hour, or 0.75 litres per hour. At 40 hours spent idling (or at a crawl) that’s 30 extra litres of gas burned thanks to congestion.

Gas prices are currently very low, averaging just over a dollar per litre in Vancouver. That means at our currently-low gas prices, the increase in congestion would cost you an extra $30 a year.

But gas prices aren’t going to stay this low forever. They’ll go up. If you take the gas prices between July and November 2014 you’ll get an average of $1.384/L, so burning an extra 30 litres of gas would cost you an extra $41.50.

Given the choice between paying $50 a year for all kinds of improvements to Metro Vancouver’s transportation system or paying an extra $41.50 a year to sit in traffic for an extra 40 hours per year, which would you choose?

If you’re like Barbara Yaffe and can’t see past your wallet, you’ll vote no. If you want to sit in traffic more while saving an entire $8.50 a year, you’ll vote no.

Me? I’m going to vote yes to improving Metro Vancouver’s transportation system.