Passenger Rail losing Money in Vancouver like they do Pretty Much Everywhere

Posted by PITHOCRATES - April 8th, 2012

Week in Review

Governments love trains.  Not because they’re good economic models.  They’re not.  Unless you’re hauling heavy freight.  No.  They love them because they are so costly.  And require lots of workers from union construction workers to union maintenance people to union operators.  And that’s a lot of votes.  Which is why governments love trains.  And hate gasoline and the freedom it gives their people (see TransLink revenue took a hit despite higher ridership, cross-border gas trips by Andrea Woo posted 4/5/2012 on The Vancouver Sun).

Ridership grew on Metro Vancouver’s public transit system last year, but wavering revenues from TransLink’s gas tax and lower-than-expected use of the Golden Ears Bridge contributed to the transportation authority’s deficit, according to its annual report…

TransLink attributes the shortfall to a 5.9-per-cent decrease in fuel sales volume last year, brought on by high gas prices. Drivers also likely fuelled up in neighbouring regions, such as the Fraser Valley Regional District and Whatcom County, according to the report…

The gas tax, which is applied to gasoline and diesel fuel sales in Metro Vancouver, rose two cents to 17 cents per litre on April 1.

Meanwhile, ridership grew 8.6 per cent in 2011, with a total of about 233 million paid trips during the year. That figure is 18.5 million more than the target goal for the year, according to the report…

“Although [the bridge] experienced growth in traffic volumes over 2010, it was not to the level assumed in the budget,” the report stated. “Another contributing factor to the lower revenues were the toll discounts provided in April and May for off-peak and weekend travel.”

The TransLink Golden Ears Bridge Task Force is working on a number of initiatives to increase revenue and “enhance customer convenience,” according to the report. They include a public awareness and education program, market research and real-time web monitoring of traffic conditions on the bridge.

Most passenger trains lose money.  Because they are poor economic models.  Due to the costly infrastructure they require.  Other than the Bullet Train in Japan and the TGV in France no passenger train can pay for itself.  And that’s only a total of two lines that can.  So all passenger rail requires government subsidies to survive.  And it’s no different in Vancouver.

In Vancouver they have a 17 cents gas tax per liter of gas.  Which is about $0.64 per gallon.  Which is pretty high.  If you fill up a 17 gallon gas tank that’s about $11 in taxes.  So if you’re wondering why gas is so expensive here’s your answer.  Of course if you’re going to penalize people for using gasoline people are going to use less gasoline.  Which can be a problem if you’re funding your passenger rail with gasoline taxes.

To reduce congestion on the Golden Ears Bridge they’ve offered discounts to cross during off-peak hours.  Because gas taxes are so high people take advantage of the lower toll and travel off-peak hours.  Which can be a problem if you’re funding your passenger rail with a tax on bridge tolls.  But they’re trying to “enhance customer convenience.”  And based on what they just said that can only mean finding a way to make people pay more.  By either removing the discount toll and increasing congestion during peak hours.  Or increasing the toll.  Whichever they choose the result won’t enhance anyone but the taxing authority.

Perhaps they should cut the gas tax and the toll tax.  Which will encourage more gasoline purchases.  Increasing tax revenue even at the lower gas tax rate.  And making the streets so congested that people will avoid it by leaving their cars at home in favor of using passenger rail.  This increase in economic activity will translate into more sales and other taxes for the taxing authority. 

Counterintuitive, yes, for government officials.  But they should give it a try.  Better yet, in the future, they should just say ‘no’ to passenger rail and save themselves this headache in the first place.  And stick with busses.  Which are a far more successful economic model.

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