The $2Billion Question_Final

GTHA Business Opinion on Funding The Big Move
The $2 Billion Question

The $2 Billion Dollar Question: GTHA Business Opinion on Funding The Big Move
©2013 Ontario Chamber of Commerce
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The $2 Billion questioN:
GTHA Business Opinion on
Funding The Big Move
Contents
It’s Time to Get the GTHA Moving i
Reality Check 1
The Plan 2
What We Did 3
The Primary Principles 4
The Secondary Principles 5
The Caveats 6
The Verdict 6

GTHA Business Opinion on Funding The Big Move [i]
It’s time to get the GTHA
Moving
In spring 2013, the Ontario Chamber of Commerce (OCC) and chambers of commerce and
boards of trade across the GTHA consulted businesses in the region on how to fund The Big
Move, the province’s transportation plan to relieve congestion in the region.

We have aggregated what we heard at these consultations in the paper, which is intended
to inform Metrolinx as it prepares to release its investment strategy to the provincial
government in May 2013.

We found that businesses understand the need for new investment in transportation
infrastructure. The question is no longer ‘if’, but ‘how’ to fund The Big Move.

We know the infrastructure deficit is not a GTHA specific problem, but we do believe that
a reliable and efficient GTHA transportation network benefits the region, the province, and
beyond.

The following is our collective ranking of the short list of 11 tools proposed by Metrolinx:
Note, while we did not get 100 percent agreement across the entire GTHA business
community, the support for new infrastructure investment was overwhelming.
To our political leaders, business is saying it’s time to get the GTHA moving.
Allan O’Dette
President & CEO
Ontario Chamber of Commerce
Non-starters:
Property Tax
Employer Payroll Tax
Vehicle Kilometres Travelled
(VKT)
Medium potential:
Commercial Parking Levy
High Occupancy Toll (HOT)
Lanes
Land Value Capture
Development Charges
Regional Sales Tax
Transit Fare Increase
High potential:
Highway Tolls
Fuel Tax

“We have a choice of doing nothing
and letting the gridlock grow every
day, or to do something and help pick
up the tab for it.”
Hazel McCallion, Mayor of Mississauga, Toronto Star

GTHA Business Opinion on Funding The Big Move [1]
REALITY CHECK
The business case for investing in our transportation infrastructure is
compelling.
The quality of local infrastructure is key to attracting international
investment and talent. Effective transit and transportation grows the
potential pool of workers which businesses can draw from and the
customers that businesses can sell to. Efficient transit reduces the number
of cars on the roads, which enables goods to flow faster and more reliably.
Building infrastructure also creates jobs. For every $100 million invested in
public infrastructure, 1,670 jobs are created (Antunes and Palladini 2013).
For decades, governments of all stripes have under-invested in the GTHA’s
transportation infrastructure. The resulting congestion in the region costs
$6 billion in lost productivity annually. By 2031, the population of the GTHA
will reach 8.6 million from 6 million today and congestion will cost $15 billion
annually (Metrolinx 2008).
From a business perspective, the status quo is simply not an option.
Infrastructure is not only a
necessary condition for growth
but, together with human capital
and innovation, a determinant
for growth in regions across the
OECD. The state of the Toronto
Region’s infrastructure could
therefore significantly strain its
capacity to compete with other
OECD metropolitan regions.
OECD, 2009

[2] Ontario Chamber of Commerce
THE PLAN
The Big Move is a 25-year, $50-billion plan for coordinated, integrated
transportation and transit in the GTHA. The plan’s goal is to get people and
goods moving in this city again, connecting suburb-to-suburb and suburbs
to the downtown.
While some participants voiced concerns about the specifics (or absence)
of local projects, there was overall support for the broad strokes of the plan
and its objective to deliver a “seamless, integrated transportation grid” from
Hamilton to Newmarket to Oshawa and Clarington and across the core of
Toronto (Metrolinx 2013).
In April 2013, Metrolinx released a short list of potential revenue tools (from
a longer list of 25) with which to fund The Big Move, including seven high
revenue generating tools and four smaller revenue generating tools.
bigmove.ca
Image courtesy of Metrolinx

The Big Move by the Numbers:
• 80 percent of people in the GTHA will live within 2 km of rapid transit
by 2031
• 800,000–900,000 jobs will be created between 2012-2031
• $110-130 billion will be contributed to regional GDP by 2031
$16 billion of the $50 billion plan has been funded by all three levels of
government, including $14 billion from the Government of Ontario. The
remaining $34 billion in projects requires $2 billion dollars in new revenue
on an annual basis. How do we fund it?
Most large city-regions in the world have some form of dedicated,
sustainable revenues to fund transportation infrastructure. The GTHA does
not.
WHAT WE DID
The OCC, in partnership with 13 GTHA chambers/boards, engaged in
10 face-to-face consultations with over 250 small, medium, and large
businesses across the region. Business leaders from all sectors came
together to answer a tough question: How are we going to pay for The Big
Move?
We looked at how other regions of the world fund their transportation
infrastructure.
We surveyed our members. The Ontario Chamber of Commerce Membership
Survey of 2,059 businesses across the province found that two thirds (66
percent) of GTHA businesses and 56 percent of Ontario businesses believe
that additional and dedicated revenue tools are needed to help address the
region’s transit infrastructure gap.
What follows is a snapshot of the feedback the OCC received at its
consultations on the 11 tools.
GTHA Chambers/Boards:
*Ajax-Pickering Board of Trade
*Aurora Chamber of Commerce
Beaverton Chamber of Commerce
*Brampton Board of Trade
*Burlington Chamber of Commerce
Caledon Chamber of Commerce
Clarington Board of Trade
*East Gwillimbury Chamber of Commerce
Flamborough Chamber of Commerce
Georgina Chamber of Commerce
*Greater Oshawa Chamber of Commerce
Halton Hills Chamber of Commerce
*Hamilton Chamber of Commerce
King Chamber of Commerce
*Markham Board of Trade
Milton Chamber of Commerce
*Mississauga Board of Trade
*Newmarket Chamber of Commerce
*Oakville Chamber of Commerce
*Richmond Hill Chamber of Commerce
Scugog Chamber of Commerce
Toronto Region Board of Trade
Vaughan Chamber of Commerce
*Whitby Chamber of Commerce
*chambers/boards that hosted ‘Funding The Big Move’
engagement sessions

THE PRIMARY PRINCIPLES
The participants at each of the 10 consultations agreed that any additional
revenue tools had to conform to the following principles:
1. All new revenues must be dedicated.
Any and all revenue generated from the revenue sources implemented as a
means of paying for new transportation infrastructure must be specifically
dedicated to The Big Move plan and/or local infrastructure projects and not
be absorbed into the ‘black box’ of general revenue.
2. The collection of revenue and distribution of
funding must be transparent.
Revenue generated must be transparently allocated, administered and
reported on. There must be a clear line between the revenue generation
and project implementation.
3. The cost must be distributed and the funding
allocated fairly.
As we think about how to pay for new infrastructure, we need to reconcile
a few tensions and ensure both costs and benefits are distributed in a fair
manner among the following four key groups, without disproportionately
affecting any one of them:
• 416 and 905: What is raised in the various parts of the region and what is
spent in each region should be roughly equivalent
• Users and non users of the transit/transportation system
• Businesses and individuals
• Low income (including students and seniors) and high income
individuals
4. Revenue tools should not impact economic
competitiveness.
While the benefits of enhanced transportation infrastructure are apparent,
the revenue tools by which we pay for it should not unduly impact
economic competitiveness (e.g. an employer payroll tax could discourage
firms from hiring new employees).

THE SECONDARY
PRINCIPLES
A number of secondary principles or considerations were highlighted as
important in moving forward with support for new revenue tools.
First, there was overarching concern for efficiency. Some proposed tools,
such as Highway Tolls, Vehicle Kilometres Travelled, and HOT lanes are
more administratively burdensome than others, with between 20-30
percent of the revenue swallowed up by overhead. Administrative costs
should be kept low. We do not need more bureaucracy.
Second, the capacity for a tool to influence travel behaviour through
pricing was an important consideration for participants. Revenue tools
should encourage efficient travel choices.
Third, the tools should minimize distortions in behaviour (e.g. a fuel tax
should not be so great as to incent people to drive outside the region for
gas).
Fourth, the principle of user pay was frequently cited as a key basis
for choosing revenue tools. Businesses generally felt that the direct
beneficiaries of the system should be asked to contribute.

THE CAVEATS
The GTHA’s business community voiced four important caveats if
government is going to impose new taxes to pay for transportation.
1. Government must find efficiencies. Our members are concerned
about waste in government. There should be a relentless drive to find
efficiencies and cost savings in every government department and
agency. That said, our members understand that efficiencies alone will
not fund necessary investments.
2. The provincial government must be accountable, particularly for cost
overruns. Project costs cannot be allowed to spiral and citizens and
businesses asked to foot a greater burden as a result.
3. The Big Move is one piece of the transportation infrastructure puzzle.
GTHA transportation improvements must be part of a larger
provincial and federal transit and transportation strategy.
4. The Big Move investment strategy must include an assessment of
public/private funding and delivery options. The private sector
should be engaged where a compelling business case can be made for
savings and efficiencies. Also, there should be a review of options for
private sector delivery of transit and maintenance services across the
GTHA.
THE VERDICT
As a result of the consultations, the OCC has narrowed down the 11
proposed revenue tools into 3 categories: non-starters, medium potential,
and high potential. The non-starter tools received little or no support. The
medium potential tools are those which experienced both support and
opposition among participants. The high potential tools reflect consensus
support.
Of the 11 tools, those that specifically targeted business—employer payroll
tax and a commercial parking levy—were regarded as job killing and
imposing hidden fees on consumers.
On the following pages, we provide a summary of the most common
comments on each tool and the rationale for where they sit in our matrix.
Our members also suggested design parameters that will enhance the
palatability of the revenue tools.

Non-Starters
Revenue Tool Potential Revenue/Year How it Works Who Pays
Vehicle Kilometres
Travelled (VKT)
$1.6 billion (based on
$0.03/km)
Drivers pay a charge
for every kilometre
that they travel within a
designated area or in all
areas.
Drivers
What business said:
There were many questions from participants about this tool. How would it be implemented and
monitored? How would out of town visitors pay?
The high administrative costs to implement and collect revenues were the number one concern.
Privacy was another major concern.
Issues of fairness also featured prominently. People who drive further to work would be disproportionately
affected. Those living in the 905 and those who have no choice but to drive would pay significantly more.
For this same reason, the regressive nature of the tool was of concern to participants.
Employer Payroll Tax $710 million (based on
0.5%)
A tax is paid by
employers, either as a
flat tax based on the
number of employees
they have or as a
percentage of gross pay
in a given period.
Businesses
What business said:
The Employer Payroll Tax would disproportionately affect small and medium-sized enterprises who are
already struggling in the current economic climate.
The tool would be a drag on competitiveness and job creation at a time when unemployment is high and
economic recovery fragile. Businesses would hire fewer employees. And, the tax would be a disincentive to
invest in the GTHA.
While some participants noted that transit infrastructure helps employers tap a wider labour pool and
move their goods across the region, they were concerned that there is no direct connection between the
input (revenue) and the output (improved transportation).

Non-Starters cont’d
Property Tax $480 million (based on 5%
increase in property tax)
A percentage-based
tax is applied on the
value of property owned
by individuals and
organizations.
Property owners
What business said:
Property tax is used as a municipal lever to fund a variety of essential services. There was consensus among
participants that the tool should be left to municipalities to fund these services, given the fiscal challenges
municipalities face.
As well, many were concerned about fairness and the inequities between 416 and 905 residential property
tax rates. A blanket property tax hike would disproportionately burden residents in the 905.
Medium Potential
Commercial parking
levy
$1.36 billion (based on $1/
day per space)
A daily levy is charged to
property owners based
on the amount of non-
residential off-street
parking spaces owned.
Non-residential property
owners who provide
parking
What business said:
Fairness between the 905 and 416 was a primary concern for participants. The 905 has more and larger
shopping plazas and parking lots for employees. These businesses would have to bear a disproportionate
share of the burden.
Commercial shopping parking lots are intended to hold the maximum number of people. Participants were
concerned about the economic impacts if a business has to pay for spots that sit empty during off peak hours.
There was also concern that higher parking rates will encourage businesses to locate outside the GTHA.
Some participants were concerned that this was a hidden tax on consumers since business was likely pass
on the costs through increased prices.
Others noted that this tool would encourage better and more efficient land-use planning.
Reducing the rate from $1/day to $0.50/day and offering an exemption for small businesses were the
proposed design parameters.

Regional Sales Tax $1.3 billion (based on 1%
regional sales tax)
A sales tax is a
percentage rate applied
on all goods and
services.
Consumers
What business said:
Some participants did not like that there was no direct link between the tool and transportation
improvements.
Most participants agreed that this tax would be easy to administer and therefore highly efficient. It would
also generate significant revenue.
Others noted that everyone benefits from improved transportation infrastructure, therefore everyone
should contribute to funding it.
There was consensus that this tool would need to be implemented province-wide. Every community
across the province has an infrastructure deficit. The funds generated in each community would stay in
each community for local infrastructure needs. In other words, what is raised in North Bay should stay in
North Bay. A province-wide tax would prevent a sales leakage from the GTHA to its surrounding areas.
A rebate for low-income individuals was a proposed design parameter.
Development charges $90 million (based on 15%
increase of fees)
One-time levies
imposed on new
developments and
eligible redevelopments.
Land/property
developers
What business said:
Some participants were concerned that development charges would not influence travel behaviour.
Some communities felt that development charges are already quite high and increasing them further
would only drive developers out of the region.
Other participants felt that developers benefit from the proximity to transit infrastructure and therefore
they should contribute to building it. A number of participants proposed that rates could be adjusted
according to proximity to transit infrastructure.

Medium Potential cont’d
Transit Fare Increase $50 million (based on
$0.15/ride)
A fare surcharge
dedicated to capital
projects is applied to
all transit trips in the
GTHA.
Transit riders
What business said:
Many participants felt that asking transit users to pay a portion of the cost was fair.
However, there was concern that this type of increase would be regressive and an unfair burden to people
that depend heavily on the transit system for their transportation needs (e.g. low income individuals,
students, and seniors).
Another key concern was that raising fares would discourage ridership and thus defeat the purpose of
enhanced transit investment.
Most participants agreed that if a fare increase is implemented, it should occur once service improvements
and new infrastructure are in place.
The recommended design parameters included: implementing distance-based fares, introducing time of
day pricing to reduce congestion at peak periods, and providing some form of a rebate for low-income
individuals, students, and seniors.
High Occupancy Toll
(HOT) Lanes
$25 million (based on
$0.30/km)
A charge on vehicles
with one person who
use High Occupancy
Vehicle (HOV) lanes.
Drivers
What business said:
There was a general lack of clarity on how HOT lanes would work. Concerns about the administrative burden
associated with either implementing the system or monitoring drivers using the lanes were raised repeatedly.
There were concerns about congestion on HOV lanes and the negative impact on programs, such as Smart
Commute.
In addition, the low revenue generation potential was a key concern for participants.
There were questions about whether there would be toll duplication in the event that highways were tolled
and HOT lanes were in place.
Some participants supported the user pay nature of the tool.

Land Value Capture $20 million (based on
variable rates)
Land value capture aims
to collect a share of
the increased value in
property development
that results from
transportation
investment. Revenues
can be generated
through agreements
with developers for up-
front contributions or
periodic contributions
paid over the duration of
a project.
Property owners
What business said:
There was a general lack of information on how land value capture would be implemented. This led to
concerns that the tool is too complex administratively. This, plus its low revenue potential, makes land
value capture a difficult sell.
Like development charges, some participants felt that this tool sends a good policy signal to property
owners who benefit from proximity to transit infrastructure.
Others disagreed and felt that increasing fees to property owners/developers would discourage new
development.
There were concerns about the fairness of the tool for those in the 416 or large urban centres, such as
Mississauga.

High Potential
Highway Tolls $1.4 billion (based on
$0.10/km on 400 Series
highways, and major
municipal expressways,
which is approximately
half of 407 tolling
charges).
Motorists pay a toll per
kilometre travelled on
designated highways.
Drivers
What business said:
Highway tolls are a familiar model. Participants noted that the elements of the Highway 407 tolling system
must not be replicated. Namely, the revenue should be dedicated to transportation improvements and
there should be guarantees around price stability.
Participants noted that people are far more willing to pay when there is a direct connection between the
revenue collected and infrastructure improvements.
Participants expressed concern about traffic and congestion moving onto the arterial roadways.
Highway tolls are seen as a long-term revenue source. Some participants noted that tolls should be
introduced incrementally, either on a few lanes, or only once transit service improvements have been
made.
Participants were concerned about administrative efficiency and the high administrative costs and
implementation of tolls.
Design parameters might include off-peak pricing which could encourage off-peak travel and increase
carpooling during peak hours.

Fuel Tax $730 million (based on
$0.10/litre)
An additional tax is
applied to the sale of
transportation fuels, as
a flat rate per litre of fuel
purchased.
Drivers
What business said:
A fuel tax is a familiar tool that is administratively efficient.
There was some concern that while fuel taxes are currently collected for use by municipal and provincial
governments, they are not dedicated to transportation. Therefore participants were worried any additional
revenues from a fuel tax would also fall into the ‘black box’ of government coffers.
Participants found this tool adheres to the user pay model and has the potential to influence travel
behaviour.
There was also broad consensus that the revenue is not very sustainable and will diminish as fuel efficiency
increases.
There were concerns about the price per litre, and one design parameter suggested was to set the fee at a
maximum of $0.05/litre.

CONCLUSION
The OCC consulted with businesses of every size and from every sector.
We heard loud and clear: business understands the need to invest in new
transportation infrastructure.
We also heard that there is no one slam dunk revenue tool.
However, general consensus emerged around non-starter tools. Non-
starters from the business perspective included: payroll tax, property tax,
and vehicle kilometres travelled.
Consensus also emerged around principles fundamental to an effective,
efficient, and equitable funding model for The Big Move.
Business wants dedicated revenue, transparency, and accountability. They
are also concerned about fairness between Toronto and the rest of the
GTHA, between low income individuals, students, and seniors and higher
income individuals, between direct users of the system and others, and
between corporations and individuals.
Finally, revenue tools must promote competitiveness and job creation.
The OCC thanks Metrolinx for making their staff and analysis available
throughout the consultation process.
Investing in transit and
transportation infrastructure
is essential if we are to emerge
stronger.

Acknowledgments
The OCC would like to thank all the GTHA chambers/boards for their
contribution to this report. In particular, we would like to acknowledge the
following chambers/boards for demonstrating leadership, collaboration and
commitment to the project.
The Brampton
Board of Trade
Since 1887

Works Cited
Antunes, P. and J. Palladini. 2013. The Economic Impact of Ontario’s Infrastructure
Investment Program – April 2013. Ottawa: Conference Board of Canada.
Metrolinx. 2008. The Big Move: Transforming Transportation in the Greater Toronto and
Hamilton Area. Online: http://www.metrolinx.com/thebigmove/Docs/big_move/
TheBigMove_020109.pdf
Metrolinx. 2013. The Problem | Metrolinx.
Online: http://www.bigmove.ca/what-is-the-big-move/tackling-congestion/the-problem
OECD (Organisation for Economic Co-operation and Development). 2009. OECD
Territorial Reviews: Toronto, Canada. Online: http://www.investtoronto.ca/InvestAssets/
PDF/Reports/OECD-toronto-review.pdf

About the Ontario
Chamber of Commerce
The OCC is the most diverse and representational business group in the
province. The OCC works closely with governments, labour, academia, and
other business associations to create a stronger and more vibrant Ontario
economy.
The OCC represents 60,000 businesses across the province through our
network of local chambers of commerce and boards of trade. Our members
employ about two million people and produce roughly 17 percent of
Ontario’s Gross Domestic Product.
Get Involved
If you would like to get involved in the OCC’s taskforces, please contact
Josh Hjartarson, Vice President, Policy & Government Relations at
joshhjartarson@occ.on.ca

“Infrastructure is not only
a necessary condition
for growth but, together
with human capital and
innovation, a determinant
for growth in regions
across the OECD.”
OECD, 2009
occ.on.ca
Follow us @OntarioCofC

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