Metrolinx to urge sales-tax hike, parking levy to bankroll 'Big Move'

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A one-point increase in the sales tax and a new parking levy are at the heart of Metrolinx's highly anticipated plan to raise $34-billion for the next generation of transit, The Globe and Mail has learned.

The regional transit agency is set to release its suggested financing strategy on Monday, after heated debate throughout the region and on the board of Metrolinx.

The so-called Big Move is the agency's ambitious attempt to plan for a generation of transit expansion. Less than one-third of the $50-billion price tag is currently funded, and the agency is mandated to give its recommendations for raising the rest to the province by June 1.

The report was still being revised this week, but Metrolinx has indicated it will have a selection of revenue tools.

Although high-occupancy toll lanes were announced in the provincial budget, people familiar with the report say Metrolinx will not recommend more broad-based road pricing, removing one of the more controversial possibilities from its shortlist. Similarly, an increase in property taxes – widely labelled as a non-starter in suburban areas – is not on the table.

Public discussions of the options were vigorous and often divisive, with civic groups, business lobbies and experts all weighing in.

The debate turned toxic at Toronto city hall, and many across the region have spoken out against new charges. At times, it appeared that almost everyone felt they were getting a raw deal – and that someone else needed to pay more.

The strength of differing opinions has been reflected on the Metrolinx board itself.

The members have gathered repeatedly behind closed doors since the last public meeting, according to several people familiar with the proceedings, hashing out the extent to which corporations should pay, the economic effectiveness of various revenue tools, and whether the options should have a sunset clause.

The board – which includes people from both left and right – must approve the strategy before it is delivered. It is likely to do so in a vote on Monday, but the final tally of votes will indicate how well the agency has been able to find common ground.

A rise in the sales tax has long been viewed by observers as one of the best options. Sources familiar with the report say it will peg the increase at 1 percentage point. This would raise $1.4-billion annually, almost three-quarters of the amount needed, and it could be applied quickly and easily. Since the federal government cut the goods and services tax by two points in 2006 and 2007, the increase would still leave the overall sales tax below what it was in recent memory.

However, experts say increasing the tax in just one region would be difficult.

That problem, they suggest, could be avoided by applying the tax across the province, with money raised in the Toronto area going to transit and money generated outside the region being rebated or used for other purposes.

A levy on non-residential parking that the report will recommend also carries complications.

In the suburbs, home to the vast majority of Toronto-area parking spots and the most sparse transit options, it is widely seen as unfair.

That could be addressed through variable pricing that is higher downtown. Small businesses, hospitals and post-secondary education institutions are among those that are keen for a break, but it is not clear if the board will recommend any exemptions.

Metrolinx is expected to broach as well the idea of putting money raised in a formal trust that would prevent future politicians from diverting it to other purposes. And the report is expected to include a mechanism for adjusting the plan over the long term where the evidence supports such changes – a nod to recent questions raised by Transportation Minister Glen Murray.

The report will be received at Queen's Park, where the government recently secured NDP support to pass its budget, avoiding an election. No money is expected to flow before later this year, though, or more likely next year.

With the report in provincial hands, Metrolinx CEO Bruce McCuaig will head out on the road, touring the region and explaining the rationale behind the agency's choices.