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New Transit Funding Sources

mdrejhon said:
Are you meaning to say you're disagreeing with this?
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I am meaning to say, that I can't follow a thing you are saying.

Perhaps if you could simply rephrase the question in simple English with 10-20 words in a sentence, and without pulling numbers out of your imagination.

Obviously both peak/offpeak and business/recreation travel are all up.
 
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rbt said:
Seems like a good trade. Recent dividends are roughly $289M/year or under $3B per decade; and they intend to retain 40% equity. Selling estimates a total revenue ~$11B over the next decade instead of just $3B. That's a pretty good deal.
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I don't know if this is a good idea or not....but

Assuming, as the reports state, they are looking to sell 60% of it then their annual dividend would drop to about $115MM....in perpetuity. So they will see a reduction in their income from $289MM to that amount. So the cost of this $10B would be about 2% a year which is roughly what the government of Ontario pays in the bond market today for borrowed funds. So, economically, it seems pretty neutral.

I understand your 10 year calc but assuming they build a bunch of transit with this (as is the plan) and since we have yet to see any transit in Ontario that does not need some sort of subsidy...I wonder if in year 11 if that lost revenue is looked at differently when the cash needs of the province are higher but the income is lower?

The province seems to be saying that they would only sell a part of the utility if they could maintain control of pricing.....so I also wonder how deep the market will be for a $10B equity investment with so little control of income/profits.
 
TOareaFan said:
I don't know if this is a good idea or not....but

Assuming, as the reports state, they are looking to sell 60% of it then their annual dividend would drop to about $115MM....in perpetuity. So they will see a reduction in their income from $289MM to that amount. So the cost of this $10B would be about 2% a year which is roughly what the government of Ontario pays in the bond market today for borrowed funds. So, economically, it seems pretty neutral.

I understand your 10 year calc but assuming they build a bunch of transit with this (as is the plan) and since we have yet to see any transit in Ontario that does not need some sort of subsidy...I wonder if in year 11 if that lost revenue is looked at differently when the cash needs of the province are higher but the income is lower?

The province seems to be saying that they would only sell a part of the utility if they could maintain control of pricing.....so I also wonder how deep the market will be for a $10B equity investment with so little control of income/profits.
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There is a second drop in the provincial revenue. If a company is 90% owned by the Province it is not subject to income tax. The Province collects an amount "in lieu" of income tax at 26.6% of the income. If it drops below 90% the feds will collect 15% and the province will only collect 11.5%.

Now this could be offset by the increase in the net income of the utility (and the taxes collected thereon).
 
muller877 said:
There is a second drop in the provincial revenue. If a company is 90% owned by the Province it is not subject to income tax. The Province collects an amount "in lieu" of income tax at 26.6% of the income. If it drops below 90% the feds will collect 15% and the province will only collect 11.5%.

Now this could be offset by the increase in the net income of the utility (and the taxes collected thereon).
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Not sure how the net income from the utility can be increased with the province promising to retain control of the prices that are charged....of course net income has an other side and "efficiency" could be sought....job cuts?
 
If they go thru with this, and I think they should, they must divide all the proceeds equally amongst the cities/counties based a population. Ontario Hydro was built and paid for by all Ontarians and therefore all Ontarians should get their fair share in terms of infrastructure.

Middlesex has one-sixth Toronto's population so should get one-sixth the amount Toronto gets to spend on it's own infrastructure. These funds should not be centered on any one region as this is the "cashing in" of all Ontarians tax money and to do other wise would be grossly unfair.
 
It will be added evenly to the $29 billion infrastructure fund, I presume. The fund is split between GTA and non GTA based on population.
 
innsertnamehere said:
It will be added evenly to the $29 billion infrastructure fund, I presume. The fund is split between GTA and non GTA based on population.
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I think ssiguy2 is worried about the disproportionate share for regions. And not just GTA vs non-GTA but each area within and out of the GTA has infrastructure needs.

In GTA will it all go to the DRL (and Hamilton, Mississauga, etc will be left out in the cold)? And outside of the GTA will it all go to the ring of fire and high-speed rail?

I personally feel like selling Ontario Hydro is selling your house to buy a shiny new car. I would rather use the income from Ontario Hydro to have a permanent funding mechanism for infrastructure. But that is long range and outside of the next election cycle in 4 years so not important to this government.
 
Just re-read the article again and realize that the figure being tossed around is not $10B but, rather, $13B as there are different bits being considered for privatization in different ways/amounts.

So if we break down what is being considered here.....there are actually 3 Hydro things being considered

http://www.thestar.com/news/queenspark/2015/03/11/liberals-eye-10-billion-hydro-one-windfall.html said:
Wynne’s government is currently weighing her privatization czar Ed Clark’s recommendation to sell off Hydro One Brampton and Hydro One Networks’ distribution arm for up to $3 billion and a broader sale of perhaps 60 per cent of the Crown corporation to bring in as much as $10 billion.
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So if those talks are accurate and those estimates of value are too.....you could be nearing 50% of the $29B fund in place pretty quick.
 
muller877 said:
I personally feel like selling Ontario Hydro is selling your house to buy a shiny new car. I would rather use the income from Ontario Hydro to have a permanent funding mechanism for infrastructure. But that is long range and outside of the next election cycle in 4 years so not important to this government.
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Completely agree. Unfortunately it's more politically attractive to have a fire-sale of assets than to have sustainable revenue sources.

I really would have liked a gas tax/parking levy/VRT/0.5% sales tax combination revenue tool. Would have provided a lot of money:
-gas tax: hasn't been increased despite inflation since 1992. $400 million/year
-parking levy: taxes the biggest hidden subsidy to motorists, and one of the biggest drivers of sprawl. $1.5 billion/year
-VRT: when this went out, the cost of owning a car went down $60. The price of a yearly metropass went up $60. It doesn't raise much money but it should be back. This should be used by the city to fund the gardiner repairs (or new transit vehicle purchases). $48 million/year for Toronto
-Sales tax: Unlike the other tools, this would grow with the economy/inflation. There's fiscal room for this since the Harper conservatives decreased the GST by 2%. $800 million/year
 
wow...a $1.5B from a parking levy? What does that equate to? What kind of tax per stall or hour (or whatever) raises that kind of money?

Interesting that the Golden Panel would dismiss parking levies as too complicated if they had the ability to generate that sort of revenue.
 
TOareaFan said:
wow...a $1.5B from a parking levy? What does that equate to? What kind of tax per stall or hour (or whatever) raises that kind of money?

Interesting that the Golden Panel would dismiss parking levies as too complicated if they had the ability to generate that sort of revenue.
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Simple reason why it was disregarded. Every time a "soccer mom" drove to the mall or grocery store to buy food for the kids they would see a parking tax. And they will blame the Liberal government for the tax. Every day a suburban family would be reminded of the tax that is "funding the downtown Liberal elites transit".

The federal PC party learned how popular the GST was during the '93 election. And every party is now scared to introduce a direct tax because of it.
 
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