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.