Ontario: Penny-pinching province trims transit credit for seniors

The Ontario government is cutting two-thirds of the funding for the Ontario Seniors’ Transit Tax Credit program. Whereas previously $9.7 million was allocated for the program, now there is $3.5 million. The spokesperson for the Ontario Ministry of Transportation says, “no negative impacts to seniors are anticipated.”

That sounds odd.

Using Statistics Canada’s Social Policy Simulation Database and Model (SPSD-M),[1] I estimate that more than 37,000 seniors could claim this credit in 2019, with refunds totalling $6.6 million. I also found that 53 per cent of these seniors live in low-income households (using the LIM-AT measure).

But they may not all claim the credit in 2019. Social program uptake takes a few years to peak, and there is no reason to assume this case is different. Factors that could slow down uptake and make evaluation difficult include:

  • It’s a new program, created in 2017, in response to the cancellation of a federal tax credit that covered all transit users.
  • In its first year, seniors could only claim expenses occurred after July 1, which make the data for that year atypical.
  • In 2018, the Ontario government made cuts to many social programs and back-pedaled on several earlier commitments; seniors may have been unclear as to whether this program was maintained.
  • For many years the federal credit covered only monthly passes, while the Ontario program includes more options; seniors who didn’t use the federal credit may not have realized they could use the new program.
  • The City of Toronto is transitioning to the Presto system, where receipts for tax purposes are available online, in contrast to the physical cards residents used to keep as proof of expenses—yet another potential source of confusion.

The solution for low uptake is quite simple: invest a portion of the savings from the program’s first years to promote the tax credit and ensure that as many people as possible receive the refunds they are eligible for in 2019. Another option is to expand program eligibility and increase limits so that more people receive more support. For example, the government could have increased refund amounts for low-income seniors.

Instead, it is cutting back funding.

Another reason for not cutting the budget so quickly is that, according to my calculations, the estimated average amount to be refunded in 2019 (close to $200) is well below the maximum amount for the program ($450). If the number of trips increase (a desired program outcome), or the cost of each trip rises (which they do, almost every year, at the discretion of local governments), seniors have room to claim higher amounts and receive higher refunds, increasing the total cost of the program.

In short, there was not enough evidence to cut two-thirds of the estimated cost of the program.

So why do it?

The PC government used accounting tricks to inflate the Ontario deficit, which it promised to reduce, then proceeded to approve tax cuts adding up to $3.4 billion in annual revenue losses. As the CCPA’s 2019 budget analysis shows, the math doesn’t add up.

So, in addition to significant cuts to the education and health care budgets, the government is now penny-pinching tax credit programs that support seniors, including high numbers of low-income seniors.

That’s not to say that boutique tax credits are the answer to the woes of public transit.

Across the globe, federal and provincial-level governments subsidize the operating costs of transit, especially in urban centres. That’s the best way to reduce fares for everyone, and make public transit the best transportation choice in town. Here in Ontario, regional and municipal governments foot the bill alone.

The previous Ontario government had the option to change the province’s approach. It could have made affordable transit a priority; it could have at least supported local governments to fund their discounted low-income transit passes. Instead, it created a tax credit for only one of the various population groups that pay too much for transit.

That was way too little. And even that is now under threat.

On the public transit file, Ontario is going from bad to worse.


Ricardo Tranjan is a senior researcher with the Canadian Centre for Policy Alternatives’ Ontario office. Follow Ricardo on Twitter: @ricardo_tranjan.

[1] Statistics Canada’s Social Policy Simulation Database Model (SPSD/M) 27.0. The assumptions and calculations underlying the simulation results were prepared by author and the responsibility for the use and interpretation of these data is entirely that of the author.

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