When I lived in Toronto, and downtown was a (solid 45-minute) subway trip away, my daily commute cost $5. The one-way price later increased to $2.60 and, since leaving, it’s gone up to $2.65. Notwithstanding my dislike of the wage-price spiral caused by uncontrolled public monopolies, the cost was easy to absorb. Getting from Toronto from Hamilton on a daily basis is a vastly more expensive proposition; a round trip costs $26.46. Notably, however, my cost of living has plummeted overall compared to living in Toronto (and I have a vastly bigger, owned home where the windows don’t leak). Further, my real daily cost of public transit is below $26.46, thanks in part to the new Presto fare system. (It’s a stored value card created by GO Transit that can be used on many public transit systems in Ontario.)
For my calculations, let’s use April 2013 as an example month. It’s got 30 days, and I’ll need to be at work for 20 of them.
To catch the Hamilton Street Railway (HSR) express bus that runs by my house, the fare is $2.55. I can tap my Presto card on the bus and it deducts the cost from my balance. (This balance auto-refills from a credit card, resulting in time savings and a small cash-back bonus.) I get to downtown Hamilton in time for an express GO Train and run upstairs to catch it, but not before tapping my Presto card again to indicate I’m taking my default GO Transit trip. (Note that a “default trip” is another time saver because the user doesn’t need to tap their card again at the default destination station.) The train ride takes another $9.53 from the balance but, as soon as I tap the card, $1.50 is credited to the account. Why? Because HSR has a “co-fare” agreement with GO Transit. The co-fare savings alone mean that the Presto Card — which carries a $6 issuance fee — pays for itself in two days. Next, at Union Station, it’s time to tap again before entering the TTC subway station to take a five minute ride up the University side of the Yonge-University-Spadina at a cost of $2.65. There’s no co-fare agreement between the TTC and GO Transit because both agencies know that their users are economic hostages to the service. The trip cost is $13.23.
On the way home, the trip cost is the same — $13.23 — resulting in my calculated daily cost of $26.45. But here’s how the Presto Card saves me some money besides the 1% cash-back (eventually I’ll have a card that earns 1.5%) and the $3 in daily co-fare savings:
1. Ridership volume discount. GO Transit has eliminated its monthly passes in favour of the Presto Card. After 35 trips in a given month, the cost of a GO Transit ticket drops from $9.53 to $1.25. In a 20-ride month, this saves $41.40. Life-changing? No. Decent for a passive, zero-effort method of saving money? Of course. This means that my marginal public transit cost drops massively after 17-and-a-half workdays.
2. Public Transit Pass Tax Credit. There are various requirements to qualify for the tax credit and they can change from year-to-year so be sure to review them for yourself. In 2013, so long as I commute round trip 16 times on each transit service in a given month, I will get a credit for the full amount of my public transit costs for that month. The credit is a federal non-refundable tax credit which reduces my taxes owing at the lowest marginal rate. Confused? Just use TurboTax and you’ll be fine. Annually (again, assuming that April is the average month) this credit stands to save me about $880. Instead of having to keep monthly pass receipts for all three transit systems to enjoy the credit, I only need to print off a single consolidated statement for my Presto Card each year.
These savings might grow if Ontario actually implements a provincial transit tax credit. If this credit were applied in the same way as the federal credit, I’d get back approximately $300 more per year. (The reason this amount is lower is because Ontario’s income tax structure is extremely progressive, rather than regressive. The lowest marginal rate in Ontario is only 5.05%. I’m not saying “regressive” and “progressive” to make a normative statement, it’s just the accurate terminology.)
My out-of-pocket cost to get to/from work is $26.46. But after considering the ridership discount for 2.5 days a month and deducting the Public Transit Pass Tax Credit, the actual daily cost drops to $20.73. That’s a lot of money, but I’ll gladly pay an extra $15 a day if it means I don’t have to live in Scarberia.
How could I save even more money on public transit?
1. By driving to Toronto every day. In this scenario, my public transit costs would drop to zero. Of course, the price of parking near work would eat up most of those savings. Add in the cost of gas and, worst of all, time wasted in QEW gridlock and it becomes clear that commuting by car is a losing proposition for me.
2. By telecommuting. I won’t get deep into this because it would make for a whole separate post. If I only telecommuted for, say, 2 days a week then the cost savings wouldn’t as massive as you’d expect. Why? Because I’d lose the ridership volume discount and the transit tax credit. But whether I telecommuted for 2 days or 3 days a week, the major benefit would be time savings.
Thanks Presto Card for saving me money and time. I hope GO Transit (Metrolinx) and the TTC get their acts together and start offering a co-fare ASAP.