TransLink: fuel taxes and revenue

As noted in my September 15 post, Metro Vancouver’s transportation authority is looking for ways to scare up an additional $70 million per year for service expansion.

In the current proposal, a 2 cent lift in the regional fuel tax is supposed to cover $40 million of this.  But in a presentation in Maple Ridge, TransLink CEO Ian Jarvis cautioned that the motor fuel tax may not be the reliable cash cow it used to be; and in the foreseeable future, fuel tax revenues may drop.  

Fuel taxes in the Metro Vancouver are already the highest in Canada.  TransLink collects a 15-cent-per-litre regional fuel tax, and the Government of B.C. collects a 5.56 cent-per-litre carbon tax on top of its conventional fuel tax.  The 2011 Manitoba provincial budget (book C, pp 16-17) provides comparable figures for all Canadian regions.  Vancouver’s 27.95 cents per litre in total gasoline taxes compares with 18.95 cents in Abbotsford and the rest of B.C., 14.7 cents in Ontario and 9.0 cents in Alberta.

However, I’m having trouble finding evidence that high taxes and high fuel prices are changing total fuel consumption in Vancouver.  The B.C. government’s 2011 budget (p 16) projects a slight but continuing rise in fuel tax revenues over the next three years, matching the forecast in the Alberta government’s budget.  Looking into the recent past, the Sightline Institute in Seattle finds that per capita fuel consumption has been falling very slighly in B.C., but in terms of total consumption, this per capita drop will have been offset by population growth.

Mr. Jarvis’ comments point in two directions.  First is the fact that even a very small decrease in fuel tax revenues can cause headaches for public agencies, given the importance of the tax to their budgets. Second, there is a significant chance of a major run-up in oil prices sometime fairly soon, and this may transform our driving habits along with many other aspects of our lives.  A prominent apostle of this view is the former chief economist for CIBC World Markets, Jeff Rubin, whose predictions make for entertaining reading if nothing else.  And we may as well be prepared: so let’s support our local farmers, and keep our bicycles tuned up.

In the meantime, though, I will support Mr. Jarvis and TransLink as they go for the two cents.

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