Friday, June 8, 2012

What am I paying in transportation taxes?

On my daily commute into work this morning.  The talk radio was all abuzz over a nearby big city mayor who wants more taxes to pay for mass transit.  This particular mayor is loved, but also known for having a very car centered city that she helped create having been mayor for many many years.

I found it a bit rich that she is suddenly talking about begging provincial and federal governments for funds and dedicated taxes from the province since she has kept property taxes low in her city up until now.  She wouldn't want her city to have to pay the full ticket for mass transit now would she!

My skepticism about new taxes for transit for a city and region  near my home city got me thinking.  First, my worries are centered around the fact that this mayor is basically asking for me in some small way to pay for some form of transit in and around her city which I rarely venture to.  This does not make me happy.

The next thing I thought about was, how much do I pay in taxes and so forth to for the privilege of driving my car.  So I thought I'd go through some numbers to analyze how much it costs me to run my automobile.

Gasoline Taxes
According to Ontariogasprices, the tax portion per litre of gas in Ontario is $0.38841.  For the sake of simplicity I will say that based on current prices of $1.216 for gas in my area, that works out to about 32% of what I pay to fill up.
In 2011, I paid $2,155.27 to fill up my car.  By my calculations that works out to $689.68 in taxes to pay for things like transit.  I know the government doesn't use all that for roads and buses, but I think a good portion should.

License plate renewal Tax
Every year this little sticker costs $74.00.  Although I've heard that this is poised to go up in the coming years.
I'm not sure what I have to show for this.  My commute time to work has not changed in the last ten years, it has probably slowed.  I have worries the Toronto traffic crunch will move further down the highway though, despite the waste of time and money for high occupancy lanes.

Non-Tax Costs
These aren't taxes, but there are other significant costs related to owning an automobile. I look at this way, you have capital costs and no government is going to help fund the initial outlay I have to spend to acquire a car.
Being the frugal saver I am, I saved up to buy my car with cash.  So I had to pay $19,000.00 to purchase my car.  Paying this out meant a loss of other potential income through dividend investments that I would have put the funds into.  I expect to run this car for about 10 years, so this works out to about $1,900.00 a year.
Of course I have to insure my automobile by law.  also due to the vagaries of insurance calculations I have to pay more per year in the current city I live than compared to the area I lived in last year.  This is odd as technically, they are in the same metropolitan city... who am I to argue?  It costs me approximately $200 more a year for insurance in my current location.  I have had rate increases for the last several years despite having a long and spotless record.  Again, who am I to argue?  So I pay $1,710.72 a year.
Maintenance is also an issue.  Thankfully I only bought the car a couple of years ago and it is only 3 years old.  SO my maintenance costs are only $146.99 right now.

My overall annual costs to run a vehicle are $5986.98.  Without taking into account spreading the cost of the car over 10 years, $4086.98.
The annual tax portion of that amount is $763.68.

So while owning and operating a car is fairly costly.  Even though I have a reasonably affordable vehicle.  Looking up the cost of a monthly pass, it would cost me $1,044.00 a year for a bus pass that would probably take me up to 2 hours one way, to and from work.  So if I saved the cost of buying the car and bought a 5% dividend bearing stock, I could have almost paid for a bus pass, but the lost time of about 4 hours as compared to 1.25 hours in transit is just too much to bear.  Not to mention I wouldn't be able to go without a vehicle for my family.  So that is not doable.
 At the end of the day i don't see the benefit of paying more taxes, be they road tolls an extra cent on the HST.  There just needs to be an extensive extension of transit networks that are fast and efficient.  The time lost in mass transit is just too costly in personal time.

The car still rules supreme!

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