Friday, February 6, 2009

Auditor General goes after transit tax credit

When the federal government announced a transit tax credit in its 2006 budget, it was not exactly heralded by environmentalists as the best way to reduce greenhouse gas emissions. But it was also not rejected out of hand, because it did encourage public-transit use. As well, some tax-relief advocates applauded its efforts to give taxpayers something there.

Yesterday, however, auditor general Sheila Fraser came down hard on the program as part of a larger condemnation of the government's action on the environment in a review of all programs aimed at reducing greenhouse gas emissions.

This is a lede from an Ottawa Sun story on Fraser's report:
The federal government hasn't got a clue if the billions it spends on green initiatives are working or where it's even being spent according to a sweeping report by Canada's environmental watchdog.
One of those initiatives, the 15.5-per-cent transit tax credit that was slated to cost $635 million in foregone tax revenue over two years, was roundly criticized for being ineffective. This is among the most relevant passages from her report (emphasis ours):
In its 2007 Climate Change Plan under the Kyoto Protocol Implementation Act, Environment Canada stated that the Tax Credit is expected to result in emission reductions of 220,000 tonnes each year from 2008 through 2012. This was approximately double Finance Canada's estimate of the resulting emission reductions in its strategic environmental assessment. In its 2008 Plan, Environment Canada amended the figure for expected reductions to an average of 35,000 tonnes per year—about 16 percent of the original estimate. Given the lowered figure, the Tax Credit will have a negligible impact on Canada's greenhouse gas emissions.
And even if the program did have any measurable impact on cutting emissions, that impact would apparently be quite hard to quantify (again, emphasis ours):
Many factors influence public transit ridership, including the price of gasoline. The result is that it is almost impossible to measure actual greenhouse gas emission reductions attributable to the tax credit. With regard to other air emissions, Environment Canada could not provide any analysis to support the assertion that the Tax Credit would result in measurable impacts.
Do readers take advantage of this tax credit?


Anonymous said...

I claimed my bus passes last year. Although, to be fair, I would have taken the bus whether or not the credit had been offered.

Anonymous said...

I'm in the same boat as anon. I take the bus because it's cheaper than a car, and I'm not about to change my transit habits for a paltry $180/year ($60/mo * 12mo * .15). I doubt anyone who drives will either. At best, the incentive is a nod to people already doing the right thing; at worst, it's expensive greenwashing. Either way, it isn't going to change anyone's behaviour.

Anonymous said...

It'd be a shame if it didn't change people's behaviour much. Although it could be a debate-worthy idea to boost the credit.

Anonymous said...

If the whole idea of a credit or deduction is to have a short term gain then I guess it is time to get rid of the charity deduction. Since cancer, heart disease and poverty are still with us after decades of that deduction being available. Or we can look at the deduction as being part of a long term strategy.

I would suggest bus pass deductions is a more successful strategy for reducing greenhouse gas than highway expansion is. And a whole lot cheaper.

tono-bungay said...

Here is a simple test of whether it worked. Slope of the growth rate of trips on large urban transit systems in Canada before the credit: 0.67 million passenger-trips per month. Slope after it started: 0.46 million passenger-trips per month. This despite a huge increase in gas prices. You don't even have to ask how much extra growth the credit caused. Someone has to explain why transit use grew less with credit than without.