Thank you, Mr. Chairman. As somebody responsible for the day-to-day activities of public transit in Windsor, Ontario, I'm thrilled to be here.
As many of you know, transit has been a focal point of public policy deliberations at the federal level from the last decade as legislators, like you, have increasingly recognized that, fundamentally, investment in safe, efficient public transit is an investment in our economy and the future prosperity of Canada.
Given the tightly focused mandate of the committee, I've chosen to be very direct in terms of our presentation and address the committee's specific items of reference put in place. The only preface to my remarks is to highlight that the federal investments in public transit are well positioned to address the finance committee's core concerns regarding Canada's health, the competitive tax regime, and the need to create sound infrastructure that will allow businesses to succeed. We are here to make the case that federal action and support of public transit delivers on all of these factors.
I will turn first to the committee's core question regarding specific federal tax measures that should be implemented in the upcoming budget to ensure that our citizens work for their benefit and for the benefit of the employers. Frankly, Mr. Chairman, we love this question. The entire public transit industry was supportive of the federal government's 2006 budget that allowed individuals to claim the cost of a monthly pass for commuting on transit. This innovative tax measure is a tangible first step in ensuring that citizens have the basic mobility required to work. Urban mobility is a key component in ensuring that workers can build individual prosperities and then benefit their employers.
CUTO would like to highlight two improvements to this tax measure. The first focus is on employer-provided transit benefits. This measure differs from the current tax credit in that employer-provided benefits would be non-taxable dollar amounts given by the employers to the employees to subsidize the costs of commuting by transit. This is a targeted tax measure that specifically aims at promoting transit use where employers and employees need it the most.
In the United States, exempted transit benefits from taxation has been in use for 20 years to encourage transit use. Starting in 1984, eligible employers could give workers up to $15 monthly in tax-exempt transit benefits. Transit ridership increased 25% for participating employers.
Highlights of recent studies undertaken by CUTO are contained in our written submission. You may wish to review this at a later time, but I want to point out two key findings. First, in terms of the annual economic impact, the study found that there would be external congestion cost savings of between $30 million and $112 million. The second key finding was projected reduction in commuter travel of between 1.7% to 6.3%.
A final technical point highlighted in our brief is the need to change the current eligibility of parents to claim the transit tax credit for dependent post-secondary children over the age of 19. The current tax credit does not allow parents to claim a tax credit beyond the age of 19. This age seems to be an arbitrary cut-off and does not recognize the reality of parents supporting post-secondary students.
Turning now to the committee's question regarding program spending measures that would be implemented to assure Canadian businesses are competitive, you all know that efficient and effective public transit is vital to the movement of people and goods in Canada's urban economies. Without public transit, many of our urban centres would be even more gridlocked than they are today. Investment in public transit is one of the best strategies for limiting congestion and keeping our economy strong.
In March 2006, Transport Canada released the results of a study entitled The Cost of Urban Congestion in Canada, which conservatively estimates the cost of recurrent congestion in urban areas between $2.3 billion and $3.7 billion a year. Transit efficiency has huge implications in our cities and our economies. In dozens of the studies around the world, higher transit ridership consistently correlated to greater overall economic success and a higher standard of living.
I invite you to review our written submission, which highlights studies published this summer by the Conference Board of Canada and Queen's University that make it clear that federal government investment should focus on modern transportation and a funding model to ensure that transit keeps the economies in our cities moving.
Finally, the committee has asked how we can ensure that the government is able to afford measures and ensure prosperity. Simply put, Canada cannot remain economically competitive on a global basis if we fail to adequately support public transit. When viewing public federal policy in the context of other OECD nations, it is significant to note that Canada remains the only OECD country without a long-term predictable federal investment in transit. As an example, in the United States legislation provides $52.6 billion for public transit over the six years 2004 to 2009. That's $9 billion annually.
In closing, the federal government has a unique opportunity to play a pivotal role in the lives of Canadians while addressing important economic objectives.
On behalf of CUTA members, I'd like to thank you for this opportunity.