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Transit advocacy group calls for new tax in City of Ottawa to support public transit

OC Transpo deficit deepens
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The City of Ottawa should study imposing a new levy on vehicles to help fund OC Transpo and O-Train operations, a new report recommends.

Leading Mobility released a new report called "This is the End of the Line," warning that transit agencies across Canada will have to implement other revenue tools to maintain existing transit service without increased funding from provincial and federal governments.

"Without new revenue, there is a real risk of service cuts and stalled service expansion that would weaken public transit systems across the country," Leading Mobility says.

OC Transpo is forecasting a $49.8 million deficit in 2024, as transit ridership is slow to return coming out of the COVID-19 pandemic.  The transit service reported a $29.3 million deficit in 2023. OC Transpo is funded through fares and the transit levy on property tax bills.

The report warns OC Transpo will be forced to explore new revenue tools to close the budget gap if there is no funding from the upper levels of government. Leading Mobility recommends the city explore implementing a vehicle levy on all license plates registered in the city to help fund public transit, but warns there would be "considerable political risk."

"Based on the operating revenue shortfall identified in this study, a Vehicle Levy would likely generate moderate revenue for OC Transpo," the report says.

"Vehicle Levies would present the City of Ottawa with an opportunity to work toward climate action goals and objectives by discouraging high levels of automobile ownership and potentially influence Ottawans to take transit, walk or cycle."

Gatineau's STO is looking at a new vehicle registration tax to help fund transit, while Montreal charges residents a $45 fee to support public transit when they renew their vehicle registration, according to the report.

A vehicle levy would be charged when license plates registered in Ottawa are renewed, according to the report.

"A Vehicle Levy would add minor cost pressures on drivers while also raising transit revenue that could be used to increase service levels," the report says, adding Ottawa could implement a levy targeting a specific type of vehicle such as large SUVs or a light pickup truck.

The City of Ottawa would require the Ontario government to change both the Municipal Act and the Highway Traffic Act to charge a levy.  

Leading Mobility's report says a vehicle levy could support the goals in Ottawa's Transportation Master Plan of 26 per cent using transit by 2031. 

The report also looked at the idea of an off-street parking tax, which would be levied on all off-street, privately owned and operated parking sales and spaces.  The report notes TransLink in Vancouver collected a tax on parking spaces, while Montreal levies a tax on the surface area of off-street parking.

According to the report, an off-street parking space levy of $50 could generate $101.7 million a year in revenue for OC Transpo.

Another option for the city of Ottawa is a 'Transportation Network Company Fee' imposed on ride-sharing companies.

Leading Mobility recommends the federal government develop a new model for transit operating funding and calls on provincial governments to work with municipalities to identify solutions to transit operating funding cost pressures. Provincial governments are also urged to adopt new legislation to allow municipalities to use alternative revenue tools to fund public transit.

"The consequences of underfunding pose severe long-term consequences for quality of life in Canadian cities," David Cooper, Principal at Leading Mobility, said in a statement. "In addition to improved mobility and affordability in cities across the country, improved transit systems are a boon for economic growth and acting to combat change."

The report also recommends Toronto implement a non-residential off-street parking levy and Montreal impose a Vehicle Kilometres Travelled Tax, which would charge road users directly for congestion and roadway costs.

Leading Mobility in a Toronto-based firm that describes itself as a company that provides public sector agencies, community stakeholders, and transportation suppliers with progressive, thoughtful and evidence-based transportation planning advice to advance transformative mobility projects.

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