The Press in Paris | Taxing businesses: the 7 billion question

Should companies pay a special tax to finance public transport?

The question, in France, was settled half a century ago. Companies with more than 10 employees pay billions each year through a payroll tax.

And it’s going pretty well as a result.

Here in Paris, this “mobility payment” generates half of all revenue for Île-de-France Mobilités (IDFM), the body responsible for planning and financing public transport. That’s more than $7 billion a year, which is reinjected into the operation and expansion of the network.

A fortune.

These investments can be seen everywhere. There are currently construction sites all over the capital. The Parisian network, already one of the densest in the world, will double in size over the next decade, with 200 km of new metro lines and around sixty new stations.

Rare are the taxes whose effects are so visible and concrete.

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We have already forgotten it, with the psychodrama around the SAAQ, but Geneviève Guilbault was in Europe just a few days ago, on a mission on public transport (1).

The Minister of Transport was intrigued by the French “mobility payment”. She told me that she finds this idea of ​​a “constructive contribution” from companies “interesting”, at a time when Quebec is seeking to diversify the sources of income in this sector.

Words that immediately provoked a deluge of explosive reactions.

It was predictable.

The tax burden on Quebec corporations is already too high, experts have judged in the pages of The Press, and imposing a new tax would be “a false good idea” (2). The Conseil du patronat and the Board of Trade of Metropolitan Montreal have also called for the greatest “caution” (3).

These groups are right when they say that doing business in Quebec is already very expensive. Their opposition to any new tax is understandable.

The French “mobility payment” is all the more frightening as it is high. The rate, which varies according to the size of the cities, reaches 2.95% of the payroll in the Paris region. It’s a lot.

I still suggest taking a deep breath before categorically dismissing this idea for Quebec.

There is a margin, as the French say.

Could a “mobility payment”, much lower than in France, be envisaged, with modulation according to the size of the city and the availability of public transport?

Could a small portion of what businesses already pay to Quebec City be redirected specifically to public transit?

All this deserves to be studied, dissected.

The idea of ​​such a tax has already been analyzed as part of a major project on the financing of public transport, carried out in 2019 in Quebec. The summary report cites the example of Oregon, which imposed a tax of 0.1% on payroll, without the heads of companies setting themselves on fire (4).

According to the most recent forecasts, this tiny tax should generate revenues of 180 million this year in Oregon, a state of 4.2 million inhabitants (5). Amounts that will be used for public transport. It is considerable.

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The “mobility payment” is generally well accepted in France, even if the employers get carried away when it comes to raising the rates, Laurent Probst, managing director of IDFM, told me in an interview in Paris.

All is not perfect, however. IDFM will still need hundreds of millions of euros to balance its budget over the next few years, and vigorous debates are to be expected on the solutions to be recommended.

But if the pill of the “mobility payment” goes quite well, it is because the development of the public transport system is dazzling here. There are four metro lines under construction, two others being extended, dozens of stations under construction or being modernized…

All of this is expensive for companies, but they see concrete results, everywhere, all the time.

For such a payroll tax to be accepted in Quebec, and especially in Montreal, the development of the network would have to be matched. That part of these sums be used to improve the service offer, and not just to absorb the deficits of the transport companies. There is a long way to go.

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Geneviève Guilbault will have a big challenge. She wants to complete by the end of the year a five-year financing agreement with the public transport sector, whose annual shortfall exceeds half a billion due to the drop in pandemic ridership.

Several scenarios have already been discussed in recent years to diversify sources of income. Among these: a kilometer tax, tolls or a tax on the charging of electric vehicles.

Minister Guilbault will conduct consultations in the coming weeks to fuel her thinking. Nothing is decided yet. From the outset, we know that his government is very reluctant towards any form of new taxation. The exercise will be tricky.

There are already more than 100 million that could be harvested each year, right now.

For this, the Société d’assurance automobile du Québec (SAAQ) would have to be able to collect the annual tax of $50 per vehicle in the suburbs of Montreal, as requested by the Montreal Metropolitan Community since 2019 (6).

Impossible before 2024, replied the SAAQ… due to computer problems.

You can not make that up.