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Canada

Scheer's costly tax credit could boost public transit use, but likely not by much

As part of our federal election coverage, CBC News is assessing the truthfulness and accuracy of statements made by politicians and their parties.

The Claim: The Conservatives' proposed Green Public Transit Tax Credit is "going to make it more attractive to use public transit rather than taking someone's car."

— Conservative Leader Andrew Scheer

The Facts:

The federal Conservatives are promising to resurrect a tax credit that they say will not only save taxpayers money, but encourage more people to ditch their vehicles for public transit and help the environment. 

It's not a new idea — the last Tory government tried the same thing. But academics familiar with how it worked then say the benefits were minimal for such a relatively expensive policy.

The proposed Green Public Transit Tax Credit is a 15 per cent credit that would apply to the costs of weekly and monthly transit passes and frequently used electronic fare cards. The Parliamentary Budget Office says that Scheer's new credit would cost $229 million in 2020 and $308 million by 2028.

It's nearly identical to a tax credit introduced by Stephen Harper's government in 2006. Justin Trudeau's Liberals scrapped it in 2017, calling it ineffective.

Andy Byford, then the CEO of the Toronto Transit Commission, lamented its end and said it "undoubtedly had a positive impact on TTC Metropass sales and ridership growth."

Surely, the tax credit would put money back into the pockets of some transit riders. For example, a family of four transit users in the Greater Toronto Area would save nearly $1,000 a year, Scheer said.

But independent experts who examined the effects of the credit's previous iteration say it ultimately did little to boost transit ridership and proved an unsuccessful measure to curb greenhouse gas emissions.

Nicholas Rivers, Canada Research Chair in climate and energy policy at the University of Ottawa, along with a colleague, studied nationwide ridership in the year before and five years after after the introduction of the Harper-era tax credit.

They found it had a "small" impact.

"It caused about a 0.3 per cent increase in transit ridership," Rivers said in an interview. 

In terms of the number of people using public transit to get to work, for example, it represented a 0.02 per cent overall boost.

Cost seen as high

Based on that increase, they determined it was costing Ottawa about $3,500 for each person that switched over from other modes of transportation to public transit. And at the time it was cancelled, the tax credit was costing the government $200 million a year. 

"So it was a pretty costly policy to have such a small effect," Rivers said.

Another analysis by Vincent Chandler, an assistant professor of economics at the University of Québec in Outaouais, found that the tax credit's effect on ridership was neglible.

It also tended to benefit wealthier users, he calculated.

Transit riders earning between $90,000 and $100,000 ended up receiving 40 per cent more from the tax credit than those making between $25,000 and $30,000.

Those getting the maximum benefit had a stable job and rode public transit every day. In turn, that meant they most likely lived in an urban centre, where public transit is concentrated and the cost of living is higher. In other words, they were relatively wealthy.

"So we were giving most of the money to people who already had a lot of it," Chandler told CBC News.

As for greenhouse gas emissions, Scheer's campaign did not respond to a question about specific reduction associated with the tax credit. 

Just how many tonnes of emissions were saved by the tax credit introduced by the Harper government is still unclear.

In a 2009 report, then environment commissioner Scott Vaughan wrote, "Many factors influence public transit ridership ... The result is that it is almost impossible to measure actual greenhouse gas emission reductions attributable to the tax credit."

With that in mind, Rivers said his study concluded that the credit was an "extremely" expensive way to cut emissions. He calculated that every tonne of greenhouse gas emissions cut through the tax credit cost Ottawa about $1,000. 

In comparison, the Liberal government currently prices one tonne of emissions at $20, soon to be $50. 

"So it's really not that cost-effective a policy for reducing greenhouse gas emissions," he said. 

Verdict: Misleading

Sources: Scheer, Singh talk transit, cellphone fees in GTA battlegrounds, CBC News; End of public transit tax credit to cost TTC $5M, report says, CBC News; The effectiveness of public transit tax credits on commuting behaviour and the environment: Evidence from Canada, Nicholas Riversa and Bora Plumptre; The Effectiveness and Distributional Effects of the Public Transit Tax Credit, Vincent Chandler; 2008 December Report of the Commissioner of the Environment and Sustainable Development, Scott Vaughan

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