Why fares for transit?

Why do we ask people to pay a fare for mass transit? Obviously, somebody needs to pay for transit. But why fares?

Historically, the reason is clear: before WWII, mass transportation was - especially in the United States, but even in Canada - an industry that had significant private participation. But the decline in costs for the automobile, combined with the improvement in living standards, made mass transportation less profitable as a private enterprise (not to mention some skullduggery on the part of auto companies, see GM.) We saw a massive shift in mass transit from private, for-profit enterprises to public, non-profit enterprises. In some places, fares were less a means of private finance and more a means of keeping the poor off the trains. This strategy has not met with long-term success, to say the least.

Today, almost all mass transit in North America is publicly owned and operated, but the fare structure remains. Why? Why not simply make admission to transit free, and charge residents of major cities a small tax premium on their property or income taxes (something you need to give an address for) instead of fares? This would - even if the level of funding were the same - achieve major savings. First and most importantly, the labor costs that come from administering the fares - including (in Toronto) printing and distributing tokens, tickets, and passes, collecting those fares, and printing the now-obsolete transfers - would almost all be unnecessary. Secondly, tax revenues are by definition "cheap money", in that it usually comes at much lower administrative cost than other means. It might also make transit more enjoyable, as fare collection is certainly the most aggravating part of using mass transit - aggravating for the customers, and aggravating for the fare collectors as well.

I don't think administration will be eliminated - this is government, after all - but massive reductions are plausible.

Some easy answers to the easy objections:

1) It's unfair to ask people who don't use transit to pay for it. People - maybe rationally - choose to buy a car and rely on that for their transit needs. Why saddle them with other burdens?
Answer: It's "unfair" to ask people to pay for the fire department, when most people will never need it either. But we do demand that people pay for it, even though some people invest in better fire-proofing their homes, more fire extinguishers, etc. More substantively, just because a person doesn't use transit, doesn't mean they don't benefit from it. Every person who takes the subway is keeping a car off the road, so drivers have an immediate interest in encouraging transit, even if they never want to use it. (And realistically, almost no one would want to live in a city like Toronto without at least having the option of transit.)

2) Not everyone who uses transit will necessarily be a taxpayer, or live in that jurisdiction. You've got the problem of literal free riders.
Answer: I don't think this is a real problem, honestly. Property taxes (and maybe rent premiums) should be enough to cover the costs of a decent transit system, and the whole point is to make transit as open as possible. If you insist, however, there are two possible responses to this problem. One would be to tax everyone, nationally, at a rate to fund mass transit and disburse the funds to municipalities. That would eliminate the free rider problem, but is probably politically impossible. (Asking Charlottetown to pay for Toronto commuters is a non-starter.) One idea - really just a suggestion - would be for income tax filers to list themselves and any non-taxpaying dependents, and be given unlimited passes (that don't require a human to verify) until the next tax deadline. This would also give everyone in a given city a reason to file their taxes, especially the poor. It would be an additional administrative burden, however, and isn't what I would prefer.

As for the poor - who are probably not paying taxes to begin with. One response is to simply say, so what? Make the tax progressive, so the rich pay more than the poor. This kind of common sense is not politically palatable anymore, however, so it's probably better to simply say that by a) massively increasing the paying "customer" base, and b) reducing the administrative burden, the poor would benefit by much lower prices for the transit they are mostly already using.

Tourists could be given temporary passes at a premium through travel agencies, etc. After all, we have a tradition (of fleecing Americans) to uphold!

3) More money for lazy workers and crappy buses and streetcars? No thanks!
Answer: I'm not talking about more money, just smarter money. That's not to say I'm opposed to more money, just that isn't what I'm talking about now. Besides, taking the least-pleasant part of their job away - a part of their job that's totally inefficient and unnecessary - could actually make those workers happier and more productive.

More broadly, I'm not in favour of simply expanding the existing system of buses, trains, and streetcars. Having read a bit about it recently, a robust Personal Rapid Transit system could be a huge improvement over current modes of transit.

It's kind of surreal that we don't simply fund mass transit this way, actually. In most places, fares make up the minority of funding and tax subsidies make up the majority. Toronto is different, but the argument is fundamentally the same - this is a public service, necessary to make this city (and all large cities) liveable. But we don't want to fund it efficiently, or else people might actually - horrors! - use it pleasantly. The real absurdity to this state of affairs was exposed during the recent strike, with calls to make TTC workers "emergency personnel" solely for the purpose of banning strikes. I wrote about how stupid this was before, and now I'll add: It's stupid to make the TTC an emergency service like Fire, Police, and Ambulance services but not fund it appropriately and sensibly. If it's necessary for the city, treat it like it's necessary - make it universal and well-funded.