Mr. Speaker, I understand that I have about six minutes left, so if I may I will just go back over this a little. The bill proposes that there be transit pass credits issued for those who are using transit systems, providing they provide supporting vouchers. This does raise some complex and difficult issues.
The first has to do with whether in fact this is a cost effective way to increase ridership. The second issue is whether this is a fair proposal. The third is that such proposals should be, in general terms, relatively simple for tax authorities to administer.
If I may, I will take a little closer look at what I would say is a good-spirited and thoughtful proposal from the member opposite, but which, when we look at it a little bit more carefully, raises some difficulties that become problematic.
Accessibility is a factor when assessing the cost effectiveness of a proposal. On the evidence we have thus far, it appears that accessibility to public transit is in fact the determinant of whether one uses public transit. Obviously if we are close to subways or buses and they are convenient, we are going to use them. If we are not close, we probably will not. On the other hand, many individuals drive to work not because it is cheaper but for other reasons altogether. They may need to travel at off peak hours or something of that nature.
These are the issues that come up and which mix into personal preference, so the studies seem to show that tax incentives and costs are relatively insensitive to the use of transit. In light of these factors, it is unlikely that a tax credit would lead to a large increase in the number of people using public transit.
As I said previously, there is really no one in the House who does not want to increase the use of public transit, but it is our view that this in fact may not be what will be accomplished by what is a relatively expensive measure.
Currently, for example, there is a study going on with the national capital region. This project provides a 15% discount to government employees for using public transit. What it shows, spread over the 9,000 employees who could have accessed such a discount, is that 915 employees participated in the program and only 54 were new transit users. This represents one new transit user for every 16 existing users. It is equivalent to a ridership increase of 6%. In other words, 94% of the benefit went to existing users.
The results of this program illustrate that the impact on the transit ridership of a federal tax credit for public transportation costs would be relatively very small, and it is clear that this would be a relatively costly exercise. It would result in significant revenue losses to the government, in the range of $240 million to $300 million per year.
The transit pass program has been extended to all federal departments in the national capital region and Transportation Canada will formally evaluate the program in the autumn of this year. Indeed, in the recent audit of the program, the Commissioner of the Environment and Sustainable Development noted the government needs to ensure that it is using the most cost effective tools to accomplish its objectives.
There is also a fairness issue that arises. The proposal would largely benefit people in urban centres where there are extensive public transportation systems. Therefore, people in non-urban centres, in small and rural communities, would not necessarily benefit from such a measure.
Generally speaking, the income tax system does not recognize personal expenses. If we were to go that route and use the general taxpayer, let us say, to subsidize personal expenses of other individuals, that would create a precedent. We do not know what that might actually lead to.
Our tax system provides a basic personal amount to all taxpayers. According to the budget tabled in the House for 2005, the government proposes to actually raise the personal exemption up to $10,000 by the year 2009. That therefore leaves $10,000 for individuals to spend as they see fit, including, if they wish, for the purchase of public transit passes.
Finally, the third issue is that we want a system that is relatively simple to enforce. The contemplation as put forward by the bill is that we would have to produce receipts in order to claim the credit. It is not clear that transit authorities are prepared or are in any position to issue receipts to users. Unless transit authorities are prepared to adjust their systems in order to do that, there will be a significant issue of proving the entitlement to the credit.
Therefore, we on the government side do not believe that this bill hits on those three criteria. It does not fill the criteria of effectiveness; it is very costly but not necessarily effective. It is not fair, and it has real issues around simplicity.