Referendum Questions: What happens after 10 years? Does the tax go down or up?

There's no sunset clause built into the Congestion Improvement Tax, but any eventual cut or hike would be up to the province

There is no sunset clause so the 0.5 per cent sales tax increase in Metro Vancouver is expected to be permanent, if a majority of the region’s voters approve the proposal.

Although the mayors’ plan calls for nearly all improvements to be in place within 10 years (a light rail from Surrey to Langley along Fraser Highway would take 12 years), that doesn’t mean the new transportation investments are paid off at that point.

Capital financing of major projects would be spread out over 20 to 30 years, according to Port Coquitlam Mayor Greg Moore.

While much of the Congestion Improvement Tax goes to cover the region’s share of the $7.5 billion in capital spending, Moore also noted some of the tax goes to pay annual operating costs, which don’t ever stop.

Existing SkyTrain upgrades make up the biggest increase in operating costs at $53 million a year, followed by $47 million for new B-Line express bus routes, and then increased rush hour bus service, Surrey light rail and the Broadway subway, each of which add around $23 million annually. More passengers carried means more fares generated and that would offset some but not all of the higher costs.

Moore said mayors considered an expiry date for the tax but dropped the idea because their polling found voters would only be confused by a promise of the tax ending two or three decades from now after financing was paid off.

There’s no guarantee the tax won’t rise in the future but Moore insisted there’s no need to increase it – he said the $250 million per year it would generate fully funds the region’s share of the plan.

No campaign head Jordan Bateman says TransLink or the mayors may push for more improvements 15 years from now by increasing the tax above 0.5 per cent.

Yes coalition spokesman Bill Tieleman said no increases could happen without provincial government legislation.

“There’s only one body that can raise or lower sales taxes in British Columbia and that is the B.C. provincial government,” Tieleman said. “TransLink can’t do it. The mayors’ council can’t do it. The individual mayors can’t do it.”

Future provincial governments could raise or lower the PST province-wide for any number of reasons and presumably without a referendum, so the total 7.5 per cent sales tax in Metro Vancouver after a Yes vote isn’t necessarily static, even if the regional half point is.

Tieleman noted the province raised the PST to 7.5 per cent in 2002 before dropping it back down to seven per cent in 2005.

The federal GST has been cut in steps from seven per cent to five per cent.

“Governments can raise and lower their sales taxes as they decide and they’re accountable to voters for those actions,” Tieleman said.

He said it’s not impossible that the sales tax could be eliminated as part of a future long-range move to road pricing.

Bateman said the fact the provincial government ultimately controls the Congestion Improvement Tax and not just Metro mayors gives him little comfort.

“We don’t know who the government will be in the future and the NDP is very excited to give TransLink every dollar they could possibly want,” Bateman said. “There is no guarantee it stays at 0.5 per cent.”

Referendum Questions is a Black Press series exploring issues related to the Metro Vancouver transit and transportation referendum. Voters must mail in ballots by May 29 on whether they support the addition of a 0.5 per cent sales tax in the region, called the Congestion Improvement Tax, to fund billions of dollars worth of upgrades. Follow the links below to read more in this series.