The National Association of City Transportation Officials (NACTO) calls on Congress to renew its commitment to tax relief for commuters on transit. In 2009, the American Recovery and Reinvestment Act (ARRA) leveled the playing field between those who take transit and those who drive by raising the pre-tax cap on transit benefits to $230, the current pre-tax allowance for parking. Without action, the transit benefits will expire on December 31, 2010. NACTO hopes that the transit benefits extension will be included in the tax package now being negotiated in Congress.

“This de facto increase in taxes for transit riders is the wrong policy at the wrong time,” said Janette Sadik-Khan, NACTO President and Commissioner of the New York City Department of Transportation. “It’s a tough economy for workers right now, and the federal government is on course to add insult to injury for riders already dealing with fare hikes in many cities.”

According to a study by the Transit Center, the reduction in the cap of pretax transit benefits would result in a national transit ridership decline of between 5 and 9 percent. More importantly, workers already hard-hit by the recession would face steeper transportation costs. Workers currently spending $230 a month on mass transit would see their commuting costs increase by 18 percent. An estimated 30 percent of all transit commuters using the pretax benefits would be affected by a return to the pre-2009 level of $120 per month, or almost half that of the parking tax relief.

Some members of Congress have already taken action. In the Senate, the Commuter Benefits Equity Act (S.322) would permanently extend the maximum transit commuter tax benefit at the current level. The companion bill in the House, H.R. 891, has 48 co-sponsors. However, questions remain over whether or not the transit benefit extension has been included in a new tax package negotiated by the President and Congress. NACTO urges Congress include the transit benefit extension in any tax package to be considered.