Government's need consumption, since this is how they collect revenue. If I buy a big expensive SUV the government gets more money in sales taxes and extra fuel taxes, the city of Toronto will get taxes for registering the vehicle in Toronto, and fees whenever I park, fines if I park in the wrong place, the province will get taxes whenever I buy anything car related or not. It's all about consumption.
The free range urbanite on his bicycle may be helping the environment, but he's doing far less to contribute to the city's financial sustainability. Toronto and Ontario need people to consume and buy things, and a car, which must be constantly fed and thus taxed, is the perfect municipal and provincial cash cow. If everyone in Toronto got rid of their cars tomorrow the city and province would be cash poor PDQ. If every cyclist commuter dropped their bike and bought a car, they'd be contributing far more finanicially to the city and province.
Yes, yes...will no one think of the environment? If that makes you feel better about reducing your financial contribution to the city, then fine.