Alternative Funding for Canadian Transit Systems
Canadian Urban Transit Association (CUTA)
Case Study 4: Land Value Capture – Special Assessment District
Project: Local Transit Tax
Location: Halifax, Nova Scotia
The Local Transit Tax was introduced by the Halifax Regional Municipality (HRM) in 2009 to
separate the costs of transit services from the general residential tax.271 The Local Transit Tax is
applied to all residential and resource properties within a 1-km walk of a transit stop to fund
Metro Transit’s conventional services, including the addition of new routes and improving
service schedules. In 2009, a rate of $0.088 CAD per $100 was applied to all targeted
properties based on their full assessed values; the rate has since increased to $0.105 CAD. The
new tax was not meant to raise more funds for HRM as the residential general tax rates were
reduced at the time same time the separate transit taxes were introduced.
Revenue
Since its implementation, Local Transit Tax has raised, on average, $21.7 million CAD per year.
The lowest annual revenue earned was $16.9 million CAD during the period 2009-2010, but it
subsequently experienced a steady increase along with property assessment growth and new
service areas. For the period 2013-2014, the annual revenue is budgeted to be $25 million
CAD. 272,273,274 Such a stable and predictable source of funding greatly increased the future
planning and budgeting capabilities of Metro Transit. The Local Transit Tax covered roughly
30% of the annual conventional transit service expenses.
Social Equity
One of the main purposes for the Local Transit Tax was to
link the taxes more closely to transit services provided and
Link the taxes to transit
benefits received. By implementing the tax, HRM
services provided and
anticipated that 2.5% of the property owners in the urban
benefits received.
tax zone would experience a tax rate decline because they
are outside the one-km distance measurement from transit.
On the other hand, 4.5% of owners in the suburban or rural
tax zone were expected to incur greater tax expenses because they are within the one-km
targeted area.275 Since the tax reallocates the share of transit service costs among residents to
better reflect their access to the transit service, the tool may be considered horizontally
equitable.
271
Halifax Regional Municipality, http://www.halifax.ca/taxes/TaxBill/Definitions.php#Other.
Halifax Regional Municipality, “2011/2012 Business Plans and Budget (Approved).”
273 Halifax Regional Municipality, “2013/2014 Business Plans and Budget (Approved).”
274 Metro Transit, “Area Rate Taxation,” 2013 Cuta Fall Conference, (2013).
275 Halifax Regional Municipality, http://www.halifax.ca/taxes/TaxBill/Questions.php.
272
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Alternative Funding for Canadian Transit Systems
Canadian Urban Transit Association (CUTA)
The tool may be slightly regressive with respect to the ability-to-pay, as it represents a greater
share of income dedicated to taxation for economically disadvantaged groups.
Travel Behaviour Impact
The funding mechanism does not have a significant impact on travel behaviour. Metro Transit’s
annual ridership remained within a 19 million to 19.3 million range for the period 2009-2013
(excluding the 2011/2012 fiscal year with a work stoppage).276
Economic Efficiency
The Local Transit Tax is expected to have minimal economic distortion. In aggregate, the tax
does not represent additional cost to residents, so the costs of living in the taxed region would
not be significantly altered. According to HRM, about 89% of all property owners would see
minimal differences in their overall tax rates.277 Therefore, the tax is not expected to trigger
payment avoidance behaviours.
Development Impact
The tool is applied to properties in both the urban tax zone and the suburban or rural tax
zone,278 so it is unlikely to encourage sprawl.
Implementation
HRM claimed that the implementation of the Local Transit
Tax does not require any additional administration
The transit tax provides
279
costs. The transit tax is collected along with other
transparency to residents
municipal residential taxes such as the urban general tax
with regard to the implied
and supplementary education tax, so payment and
collection mechanisms already exist. By separating itself
costs of transit services.
from other business units, the transit tax provides
transparency to residents with regard to the implied costs
of transit services. HRM assumed that some time commitment would be required to update the
Local Transit Area Rate boundaries, but expected to need minimal time considering HRM’s
expertise in mapping.
Since the Local Transit Tax is a component of Halifax’s municipal tax system, its implementation
required the approval from Regional Council, the main legislative and governing body for
Halifax.280
Public Perception
Halifax Regional Municipality, “A Systems-Level Performance Review of Metro Transit’s Service
Delivery,” (2013): exhibit 4.
277 Halifax Regional Municipality, http://www.halifax.ca/taxes/TaxBill/Questions.php.
278 Ibid.
279 Ibid.
280 Halifax Regional Municipality,
http://halifax.ca/mediaroom/pressrelease/pr2008/081216NewTransitStructure.php.
276
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Alternative Funding for Canadian Transit Systems
Canadian Urban Transit Association (CUTA)
There is no evidence indicating favourable or unfavourable public opinion towards the tool.
Applicability in Canada
The implementation of a municipality-wide Local Transit Tax in Canada requires the approval of
the local government. Based on Halifax’s example, implementing the tax requires constant
updating of taxed area boundaries and property value assessments, so the cost of maintaining
such information would need to be considered.
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