Road Tolls in Toronto? Fix Transit First.

There has been much talk lately about introducing tolls on Toronto‘s roads. The major arguments of those in favour are:

  1. Tolls will help bring in much needed money to be invested in the GTA’s public transit.
  2. Tolls will take some people off the roads by making it more expensive to make non-essential trips.
  3. Tolls will encourage people to take public transit instead of driving, which will in turn help ease gridlock and protect the environment.

The problem with all these arguments is that they simply don’t apply in today’s Toronto: They would apply if we had an adequate, integrated, reliable public transit system. Until we do, road tolls will be just another way to tax working people.

Here is why road tolls are unfair and will not be effective in today’s Toronto:

Road tolls will not take cars off the road unless public transit provides viable alternatives.

The reality is that many communities in the GTA are inadequately served by the existing public transit network. For example, if you live in the Jane and Rutherford area in Vaughan and work in the Kennedy and Sheppard area in Scarborough, a one-way trip from your office to your home will take some 2 hours, and you will have to switch between several busses operated by two separate transit companies (YRT and TTC). Driving will take you less than an hour. Similarly, if you live in Newmarket and work in Unionville (Markham), getting to work using public transit will take you at least an hour and a half, while driving will take you some 45 minutes.

Now let’s assume that you are a parent and your child goes to a licensed day care. Licensed day care centres in Ontario open at 7 am and close between 5:45 or 6 pm. A 2 hours commute means that you can’t get to work before 9 am, and must leave by 3:45 pm. This leaves you with 6:45 hrs in which you have to do your work, even if you don’t take a lunch break. Good luck finding an employer who will tolerate this.

So you will pay the new tolls and continue driving to work and back, because you will have no alternatives. Therefore, the road toll will be no better than a flat income tax increase – if you work, you must pay it. But unlike your personal income tax, it is not progressive: The bachelor CEO of your company who makes a 6-digit income will pay the same as the single mother / receptionist who barely pays the bills with her $25,000 annual income.

A road toll may reduce the number of occasional trips that people take, but this will have little or no impact. In reality, most traffic is caused by commuters, not by people taking occasional trips. The proof is the fact that traffic is heaviest in the time just before and immediately after regular office hours. Besides, who would, in the right state of mind, go on HWY 401 in Toronto at 8 am on Monday, unless they have to?

The revenue generated from tolls roads may or may not go into expanding public transit

Improving the transit network does require a significant investment, but I don’t know of a way to guarantee that the extra revenue generated by road tolls will actually be used to expand public transit.

Forgive my skepticism, but once the revenue from road tolls is flowing in, I expect to see a number of groups lining up to lobby that other causes should get a share of it first. They will make an argument that other causes are just as important – if not more important – than the public transit expansion. Different levels of government that finance public transit today may also be compelled to reduce their current contribution levels, arguing that other programs are in more urgent need of the funds (because the toll revenues will be available to plug the gap). In the end, there will again not be enough money left to finance a public transit expansion, and we will be told that expanding the transit will require further increasing the road tolls or increasing taxes in general. We will have road tolls, and our public transit will be no better.

I am not debating whether it is wrong or right to shift priorities and redirect revenues, neither am I suggesting that building a subway line should take precedence over, for example, essential healthcare projects. But if there is no way to guarantee that the revenue from road tolls will be spent on expanding the public transit network then road tolls are no different than old-fashioned taxes that we pay already. And if they are not different, then I don’t understand why it is ok to introduce road tolls, but it is not ok to just increase income, property, or sales taxes (and make higher income earners pay more) – or even introduce a new carbon tax (and make owners of less fuel efficient vehicles pay more).

Far from curbing pollution, road tolls may actually cause more of it

Road tolls will not take a significant number of cars off the road if people have no choice but to drive to work. They will not make people take public transit to work if public transit cannot take them there reasonably fast. I guess that most people for whom taking public transit to work is a viable option are using it already.

If road tolls don’t take cars off the road, then they will obviously not help to reduce pollution. In fact, road tolls may make things worse. One of the ideas floating around is to introduce tolls on the 400-series highways in Toronto, plus on the Gardiner and DVP, but not on other streets. If this gets done, drivers will stay off major highways when they can, and will drive more on local street instead. This will free up the 400-series highways for those who are in a rush and don’t mind paying, but those who don’t want to pay will use local streets in nearby communities instead. These streets were never built to handle the traffic volume that goes through the highway today, so they will be constantly jammed. Since stop-and-go traffic on these streets is slower than on the highways, the cars that use them will burn more fuel, and will produce more pollution.

So what effects will road tolls have?

Without viable public transit alternatives, road tolls are nothing more than an unethical tax grab that will hit flatly everyone regardless of their income and situation. People traveling the same distance will pay the same toll to get to work and back, regardless of their income, family situation, or the vehicle they drive.

Road tolls will also increase the cost of living and doing business in Toronto and will cause overall price increases: Delivering food to local grocery stores will cost more, and companies must, in turn, pass the increased cost on to consumers in the form of price increases. Job seekers will have to factor into their salary expectations the increased cost of commuting to and from work, which will increase wage pressure. Road tolls will reverse some of the economic integration that has benefited the communities in the Greater Toronto Area and will make doing business here more expensive and less attractive.

By increasing the fixed portion of the cost of owning and operating a car, road tolls may also discourage some people from buying fuel-efficient or hybrid vehicles. If owning a car costs you $300 per month today, and you could save $60 per month by buying a fuel-efficient car, then your potential savings are 20% of your total car cost. This looks significant. Add extra $150 per month for road tolls (30 days times $5 per day) and your $60 potential benefit starts looking pretty meager. This is likely to discourage some people from investing into a more fuel-efficient vehicle: Who cares about saving $60, if you are already paying close to $500?

So what should be done?

Road tolls – in one form or another – have already been introduced in other large cities around the world, and we can learn from their experiences. London introduced a congestion charge several years ago – which is, essentially, a flat fee that everyone driving into the downtown core must pay. In New York, people driving into Manhattan must pay a fee for using most bridges and tunnels.

What is different between London, New York and Toronto? Toronto‘s public transit system is no match for those of London and New York. In either of these two cities, you can get to most places using public transit in less time than it will take you to drive. This is why the road tolls of London and New York have the ability to change people’s behaviour: They reward people who take public transit instead of driving. Exactly what kind of incentive are proponents of toll roads hoping to give Torontonians, given that transit can’t take people where they need to go?

We need a public transit network that adequately serves the needs of all GTA residents before tolls are introduced. Once we have it, road tolls can be introduced as most – if not all – of the argument against road tolls will no longer apply. If people have the option to take the subway or a high-speed commuter train to work and back, then it makes sense to charge those who choose to drive. The problem in today’s situation is that people don’t have a choice: Driving to and from work is their only option.

But without road tolls, where will the money for building up public transit come from? If road tolls can generate enough revenue to pay for the expansion of the public transit network, then raising capital becomes a classical financing issue like the ones business leaders face all the time. Capital needs to be raised and then invested into public transit – and then paid back with the revenue generated by new road tolls and transit usage fees. Raising capital as part of a well thought-through business investment plan with clearly defined realistic ROI expectations is not something the public needs to be afraid of: It is an investment that Toronto requires, and that will pay for itself – rather than just a loan taken to pay everyday operating expenses. Governments typically have access to more and cheaper sources of capital than most businesses. Privatizing a share of the new assets, issuing government bonds, or even traditional borrowing are some of the options.

The bottom line is that we need a clear plan outlining what needs to be done to solve the problems of gridlock and pollution. Such plan should explain how each of the measures that it includes will contribute towards reducing traffic and pollution. Road tolls are likely to be part of it, and will make sense in the context of other measures. A sensible dialogue is needed, in which all arguments should be laid on the table and all aspects of the proposed solutions discussed.

Implementing road tolls is easy to do – but Toronto is not ready for them yet. There are many steps to be taken first, before road tolls have the capacity to change people’s behaviour – and in doing so, solve some of the problems that we face. If road tolls are introduced but fail to change people’s behaviour, we will be stuck with the same gridlock as today, the same pollution, and with one more tax that we don’t have to pay today. Far from solving any of our existing problems, such new tax applied indisciminately across the board will do more harm than good. It will be bad for Toronto, its residents, and its economy.

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