Public Transport - Operation - Financing - Revenue, Profit and Subsidies

Revenue, Profit and Subsidies

Governments frequently opt to subsidize public transport, for social, environmental or economic reasons. Common motivations include the desire to provide transport to people who are unable to use an automobile, and to reduce congestion, land use and automobile emissions. Other motives may include promoting business and economic growth, or urban renewal in formerly deprived areas of the city. Public transit systems rarely operate without government support. Some systems are owned and operated by a government agency; other transportation services may be commercial, but receive special benefits from the government compared to a normal company.

Subsidies may take the form of direct payments for financially unprofitable services, but support may also include indirect subsidies. For example, the government may allow free or reduced-cost use of state-owned infrastructure such as railways and roads, to stimulate public transport's economic competitiveness over private transport, that normally also has free infrastructure (subsidized through such things as gas taxes). Other subsidies include tax advantages (for instance aviation fuel is typically not taxed), bailouts if companies that are likely to collapse (often applied to airlines) and reduction of competition through licensing schemes (often applied to taxis and airlines). Private transport is normally subsidized indirectly through free roads and infrastructure, as well as incentives to build car factories and, on occasion, directly via bailouts of automakers.

Land development schemes may be initialized, where operators are given the rights to use lands near stations, depots, or tracks for property development. For instance, in Hong Kong, MTR Corporation Limited and KCR Corporation generate profits from land development to cover the partial cost of construction, but not operation, of the urban rail systems.

Some supporters of mass transit believe that use of taxpayer capital to fund mass transit will ultimately save taxpayer money in other ways, and therefore, state-funded mass transit is a benefit to the taxpayer. Some research has supported this position, but the measurement of benefits and costs is a complex and controversial issue. A lack of mass transit results in more traffic, pollution, and road construction to accommodate more vehicles, all costly to taxpayers; providing mass transit will therefore alleviate these costs. (Perhaps, although right-wing think tanks disagree)