Should companies pay a special tax to finance public transport?
Posted at 7:30 p.m
The question was decided in France half a century ago. Companies with more than 10 employees pay billions in payroll taxes every year.
And all of a sudden it’s going really well.
Here in Paris, this “mobility payment” generates half of all revenue for Île-de-France Mobilités (IDFM), the organization responsible for planning and financing public transport. That’s more than $7 billion a year going into operations and expansion of the network.
A fortune.
These investments can be seen everywhere. There are currently construction sites everywhere in the capital. The Paris network, already one of the densest in the world, will double in the next ten years, with 200 km of new metro lines and around 60 new stations.
Rare are the taxes whose effects are so visible and concrete.
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We’ve already forgotten, with the psychodrama surrounding the SAAQ, but Geneviève Guilbault was in Europe just a few days ago, on a public transport mission (1).
PHOTO PROVIDED BY THE PARIS AUTONOMOUS TRAFFIC OFFICE
Transport and Sustainable Mobility Minister Geneviève Guilbault listens to Yo Kaminagai, Design Delegate of RATP’s Project Management Department, during a visit to a tram line in Paris March 3.
The transport minister was fascinated by the French “mobility payment”. She told me that she finds this idea of ”constructive contribution” from companies “interesting” at a time when Quebec is trying to diversify revenue streams in the sector.
Words that immediately evoked a flood of explosive reactions.
It was predictable.
The corporate tax burden in Quebec is already too high, experts on the La Presse website judged, and introducing a new tax would be “a false good idea” (2). The Conseil du patronat and the Board of Trade of Metropolitan Montreal also call for extreme “caution” (3).
These groups are right when they say that doing business in Quebec is already very expensive. Their resistance to any new tax is understandable.
The French “mobility payment” is all the more frightening because it is high. The rate, which varies according to the size of the cities, reaches 2.95% of the wage bill in the Paris region. That is much.
Still, I recommend taking a deep breath before categorically dismissing this idea for Quebec.
There is a margin, as the French say.
Could a much lower “mobility premium” be envisaged than in France, with an adjustment to the size of the city and the availability of public transport?
Could a small portion of what companies already pay to Quebec City be redirected specifically to public transit?
All of this deserves to be examined and dissected.
The idea of such a tax has already been analyzed as part of a major public transport financing project carried out in Quebec in 2019. The summary report cites the example of Oregon, which levied a 0.1% tax on payrolls without company bosses setting themselves on fire (4).
According to the latest forecasts, this small tax in Oregon, a state with a population of 4.2 million, is expected to bring in 180 million in revenue this year (5). Amounts used for public transport. It’s substantial.
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The “mobility payment” is generally well-received in France, although employers get carried away when it comes to raising tariffs, Laurent Probst, managing director of IDFM, told me in an interview in Paris.
Some criticize it because it’s a production tax, but it’s a tax that’s very good for public transport because it’s dynamic: the more economic growth you have, the more transport you need.
Laurent Probst, CEO of IDFM, on “Mobility Payment”
However, everything is not perfect. IDFM will need hundreds of millions of euros more to balance its budget over the next few years, and fierce debates over recommended solutions are to be expected.
But if the “mobility payment” pill works quite well, it’s because the development of public transport here is dazzling. Four subway lines are under construction, two more are being extended, dozens of stations are under construction or being upgraded…
All of this is expensive for businesses, but they see tangible results anytime, anywhere.
In order for such a payroll tax to be accepted in Québec, and particularly in Montreal, the network would need to evolve accordingly. This part of these sums should be used to improve the range of services and not just to absorb the deficits of the transport companies. It is a long way.
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Geneviève Guilbault faces a major challenge. It aims to finalize a five-year funding agreement by the end of the year with the public transport sector, whose annual deficit exceeds half a billion due to the fall in pandemic ridership.
In recent years, several scenarios have been discussed to diversify revenue streams. These include: a kilometer tax, tolls or a levy on charging electric vehicles.
Minister Guilbault will hold consultations over the coming weeks to stimulate her reflections. Nothing is decided yet. We know from the start that his government is very reluctant to introduce any form of new taxation. The exercise will be tricky.
There are already more than 100 million that could be harvested each year.
To do this, the Société de l’assurance automobile du Québec (SAAQ) should be able to levy the annual tax of $50 per vehicle in the Montreal suburbs, which the Montreal Metropolitan Community has been demanding since 2019 (6).
Impossible before 2024, the SAAQ replied…because of computer problems.
You can’t make that up.