The Cost Of Doing Business

On Wednesday over at the Toronto Standard, writer Jeff Halperin interviewed Josh Hjartarson, 2BillionQuestionvice president of policy and government relations at the Ontario Chamber of Commerce, talking about the organization’s report this week, The $2 Billion Question. Business’s perspective on, you guessed it, funding Metrolinx’s The Big Move. Both are interesting reads and lead to some wider questions.

The first is kind of tangential to the matter of transit itself but one that jumped out at me immediately. In the OCC report [pages 1 & 3, if you’re following along], it was pointed out that for ‘every $100 million invested in public infrastructure, 1670 jobs are created’. The total number of jobs created between 2012-2031 with The Big Move would be in the neighbourhood of 800-900 K. 800,000-900,000 new jobs over the next 19 years.

Remember, these numbers are cited by the Chamber of Commerce, folks. Not a group you normally associate with promoting public sector spending. Numbers that would’ve come in handy during the transit funding debate last week at city council. I’ll give your grossly inflated $1000/year/household in new taxes, Mr. Mayor, and see you some one million jobs created. They shouldn’t be the only ones allowed to round up in their favour.

When talking up the merits of a casino or runway expansion, it’s all about the jobs. Jobs, jobs, jobs. justsaynototaxesTen thousand of them, apparently, if the casino were to be taken off life-support.

But the jobs created investing in public infrastructure? Not it if means any sort of tax increase. Any whatsoever. No New Taxes trumps Jobs, Jobs, Jobs every time.

Another question is what role businesses as a whole have in contributing financially to the public infrastructure that helps them operate. From the public education that provides a functioning pool of workers to the roads and rails that bring both employees and goods to their doorstep, what should the cost be of doing business? Does the business community pay its share for carrying the freight, so to speak, of the public sphere that it relies on to exist?

The quality of local infrastructure is key to attracting international investment and talent. Effective transit and transportation grows the potential pool of workers which businesses can draw from and the customers that businesses can sell to. Efficient transit reduces the number of cars on the roads, which enables goods to flow faster and more reliably.

Better transit makes for a better business environment, according to these words from the Chamber of Commerce report. If that’s the case, as a group they should be more than willing to do their part and pony up. Yet, that’s not the vibe I’m getting from the report.

Of the 11 revenue tools put forth by Metrolinx and considered by the OCC, only three directly impact businesses – commercial parking levy, land value capture and development charges – and most of the costs of those could and probably would be passed on to consumers. taxationistheftRight out of the gate, an employer payroll tax was deemed a ‘Non-starter’. “The tool would be a drag on competitiveness and job creation…”, the report states, “… the tax would be a disincentive to invest in the GTHA… concerned that there is no direct connection between the input (revenue) and the output (improved transportation).”

There’s a disconnect here between the emphasis on the importance of infrastructure in ‘attracting investment and talent’ and the concern that a payroll tax would ‘be a drag on competitiveness and job creation’. We need solid infrastructure like transit as long as someone else pays for it. Sound familiar?

How is there ‘no direct connection’ between an employer payroll tax and ‘improved transportation’? The ease with which employees get to and from work would surely be related to their overall productivity. Why should it be the employees alone, through transit fares or road tolls, paying for something that will also benefit their employers?

Like the revenue tools debate at city council, there’s too much stress put on the disincentive side of taxation for transit funding. It will chase businesses out of the GTHA.crumblinginfrastructure It’s a job killer.

Where are the voices touting this is a long overdue investment? Certainly the Toronto Board of Trade needs to be commended for its tireless work in keeping this conversation going while all levels of government dither. But there needs to be a buy in from the wider business community like those taking part in the Chamber of Commerce report that revenue tools shouldn’t be seen as a burden but a necessary course of action for our future well-being and economic competitiveness.

For decades, governments of all stripes have under-invested in the GTHA’s transportation infrastructure, the OCC report states. That much is undeniable. The question is why?

Jurisdictional disputes, starting with a near absence of the federal government on the transit file. The cities alone incapable of raising the amount of money needed and a province either not inclined to spend money building transit or overly concerned with being seen focussing on just one locality. Fear of the Toronto Premier knock.crumblinginfrastructure1

But we also can’t ignore the fact that the senior levels of government have been creating huge holes in their respective revenue streams, accepting the common sense ‘wisdom’ that lower taxes translates into a better economy. Personal income taxes cut. Sales tax reduction. Corporate taxes cut.

We can hardly be considered antagonistic to business interests in this country, according to a Pricewaterhouse Coopers study last year. Maybe the timing’s just a coincidence that as governments willingly forgo revenue, investment in the public domain has also gone underfunded. You can try blaming inefficiencies and spending scandals for the lack of money to spend but all told, it’s a drop in the bucket compared to income lost by tax cuts.

That’s not to suggest business pick up the entire tab for The Big Move. crumblinginfrastructure2But I’m not sure why they should get a pass either. Corporate taxes were never put on the table for consideration by Metrolinx or the Board of Trade. The Ontario Chamber of Commerce worries about ‘economic competitiveness’ as much as it does fairness in its consideration of the various revenue tools.

What could be more fair than everyone chipping in, including businesses? Everyone has a reason why they shouldn’t have to pay. Now is the time for someone to step up and say, here’s my x%. Let’s get this thing done.

curiously submitted by Cityslikr