General News · 28th November 2012
An increasing number of people argue that the BC coastal marine ferry system should become part of our highway system. The appeal of this idea is that skyrocketing ferry costs could then decline back to a level that is affordable for all.
One stumbling block is how to pay for it. I expect opponents will bring up the fact that the BC Ministry of Transportation that runs the highway system is already running large annual deficits. Last year its budget was $150 million in the red. Adding a money losing ferry system to it would just make things worse.
The primary source of funding for the highway system is a dedicated tax of 6.75 cents per litre on gasoline and other motor fuels. Every penny of that dedicated gas tax rate brought in around $63 million in revenue last year to the ministry.
One obvious solution to the ferry funding crisis would be to add a one more penny to the dedicated gas tax and use the resulting $60+ million in revenues to cover the BC Ferries deficit. As a bonus it would also provide tens of millions of dollars to help lower fares and upgrade ferries for a low-carbon future.
BC Ferries: "BC Ferries lost more than $16 million in the fiscal year ending March 31, 2012. The independent BC Ferry Commissioner noted in his recent report that, without changes, increasing operational costs and the ongoing need to replace aging vessels could drive funding shortfalls to $56 million a year within the next five years."
Not bad for one penny of gas tax.
Not an option they want to hear?
Unfortunately the BC Coastal Ferries Consultation and Engagement discussion doesn't include either the option of moving the ferries to the highway system or of using a province wide gas tax. There is no place on their feedback form to even suggest these options.
They do let you register your approval level for a fuel tax -- but only if it is applied exclusively to "coastal communities." Hmmm.
I did my best to include on their feedback form my preference for: "add our coastal ferries to the highways system and pay for it with one cent increase in gas tax province-wide."
BC gas tax rates in perspective
Can BC afford to add a penny per litre to fund the marine ferries? BC currently has some of the lowest gasoline taxes in the developed world. Here is a table of gas taxes (in dollars per litre) for a few nations:
I, for one, would vote for a penny increase in our gas taxes to put our marine ferries back into the highway system and bring the fares down some.
The carbon challenge
Finding a short term funding source for operating our marine ferries is the easy task. The harder task if we want to keep our ferry service is to transition it to one that can continue to operate in a low-carbon future.
My calculations from a few years ago showed the Cortes ferry emitted around 1,000 tonnes of CO2 (climate pollution) per year. Anyone familiar with the legal low-carbon mandates for BC knows that this level of climate pollution is not going to be allowed in coming years. It won't matter if the ferry is part of the highway system or not.
There are two possible low-carbon solutions I have heard about that would allow ferry service to Cortes and other islands to continue in the future. Both are expensive.
One would be to switch to a truly low-carbon bio-diesel. I've read that both Washington State Ferries and BC Ferries have pilot projects for this. The fuel is significantly more expensive.
The second would be to switch to hybrid ferries that could run mostly on electricity. These types of ferries do exist and are used mostly for short runs in a few major cities. They too are expensive.
Here again the gas tax could be used to fund this required transition.
I like the idea of increasing the gas tax one penny per year for several years. The significant revenue brought in would be used to fund the transitions of many parts of our provinces critical transportation infrastructure including our ferries. The longer we wait to fund this transition the less likely we will be able to do it all.
As my table above shows, people buying motor fuels in BC pay 35 cents less per litre in gas taxes than the Japanese and 80 cents less than the British. There appears to be plenty of room to increase gas taxes before we come anywhere close to other nations like this.
As an example, in the 1990s the Conservative government in the UK implemented an aggressive "gas tax escalator". Their reasons were to reduce the economic risks from oil dependency and to reduce carbon emissions. They raised gas taxes 3% faster than inflation. In one decade the gas tax rose 30 cents per litre.
Today in BC we can look back in to several years to our peak in oil production. We now import almost all our oil. Oil is also the number one source of climate pollution in BC. Our economic and environmental security requires we develop transportation that doesn't rely so heavily on oil.
In the table above you might notice that the gas tax in BC is slightly higher than in Canada. This is because our BC Carbon Tax adds about $0.06 per litre. Since this carbon tax has been added the BC economy has out-performed the Canadian economy as a whole.
Our current carbon tax rate of $30 per tonne of CO2 clearly pales in comparison to the gas tax rates in many other wealthy nations. For example, Germany's gas tax of $1.21 is equivalent to a $500 carbon tax rate.
Our highway system is already funded by a tax on motor fuels. If we want to increase what our highway system does to include our marine "highways" then the logical solution is to increase the primary funding source: the tax on motor fuels.
We can afford it. The question is whether we can afford not to?