News / Canada

Budget 2017: Liberals to cut tax credit for public transit passes

The 15 per cent non-refundable tax credit has been in place since 2006 and allows Canadians to deduct the cost of monthly or annual transit passes.

A TTC presto card box seen with a streetcar in Toronto.

Staff / Torstar News Service Order this photo

A TTC presto card box seen with a streetcar in Toronto.

The Liberal government is eliminating the tax credit allowing Canadians to deduct part of the cost of monthly transit passes. The 15 per cent non-refundable tax credit has been in place since 2006.

“We will eliminate inefficient tax measures, especially those that disproportionately benefit the wealthy,” finance minister Bill Morneau said in his speech in the commons.

While the public transit credit does not disproportionately impact the wealthy, Morneau said it wasn’t working.

“We set on a course to make sure our tax system was fair and that our tax system was efficient,” he said. “We found that it was not doing what it was intended to do.”

Riders will be able to deduct passes this year up until June, but after that the credit will end. Morneau said the government was investing in building more public transit, which would ultimately do a better job of growing ridership. 
Edmonton Mayor Don Iveson, chair of the Big City Mayor’s Caucus, said that tax credit amounting to $5 or $10 a month is not going to make or break a person’s decision to take transit. But NDP leader Tom Mulcair countered, saying that it’s a mistake to look at the credit only as an incentive to take transit; it's also a social good.

“It’s one of the things that gave people who used public transit a bit of a break,” Mulcair said.

According to the government, removing the credit will save just over $1 billion over the next five years.

The latest figures show about 1.8 million Canadians claim the credit annually, but only about 1.3 million people actually make enough money for the credit to reduce their taxes.

More on Metronews.ca