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Massachusetts Will Tax Ride-Sharing Companies To Subsidize Taxis (reuters.com)
Massachusetts will tax ride-sharing services -- 20 cents for each ride -- with 25% of the money raised going into a special fund for the taxi industry (according to an article shared by schwit1 ). Reuters reports:
Ride services are not enthusiastic about the fee. "I don't think we should be in the business of subsidizing potential competitors," said Kirill Evdakov, the chief executive of Fasten, a ride service that launched in Boston last year and also operates in Austin, Texas. Some taxi owners wanted the law to go further, perhaps banning the start-up competitors unless they meet the requirements taxis do, such as regular vehicle inspection by the police...
The fee may raise millions of dollars a year because Lyft and Uber alone have a combined 2.5 million rides per month in Massachusetts... The 5-cent fee will be collected through the end of 2021. Then the taxi subsidy will disappear and the 20 cents will be split by localities and the state for five years. The whole fee will go away at the end of 2026.
Republican Governor Charlie Baker signed the law, which specifically bans ride-sharing services from passing those costs on to their drivers or riders. And the article notes that Taiwan has also hit Uber with a $6.4 million tax bill, while Seattle has passed a new law allowing ride-sharing drivers to unionize.
The fee may raise millions of dollars a year because Lyft and Uber alone have a combined 2.5 million rides per month in Massachusetts... The 5-cent fee will be collected through the end of 2021. Then the taxi subsidy will disappear and the 20 cents will be split by localities and the state for five years. The whole fee will go away at the end of 2026.
Republican Governor Charlie Baker signed the law, which specifically bans ride-sharing services from passing those costs on to their drivers or riders. And the article notes that Taiwan has also hit Uber with a $6.4 million tax bill, while Seattle has passed a new law allowing ride-sharing drivers to unionize.
How do they ban the passing of the costs to drivers or passengers? Or is the point just to prevent it being a line item like the taxes and fees on a phone bill so that voters don't get mad about seeing it?
This tax is a very small bone that was thrown to the taxi industry who wanted far more crippling regulation of their competition. The ride sharing companies won big in this law.
...I am biased, but there is logic behind my bias.
Municipalities require licensing for taxi services because the taxi drivers are conducting the actual business transaction -- agreeing to transport the customer for a price, whether pre-agreed or subject to a meter reading, at the point of pickup within the municipality.
Most municipalities also require background checks for the drivers and company owners, and have safety requirements for the vehicles, as [a means to ensure customer safety | a revenue generator].
Passengers, however, are unscreened and unknown. They might come in from a phone call, or they might hail a taxi on the street.
Most of the risk, both financial and otherwise, falls on the drivers.
So, along come Uber, Lyft and their ilk, conducting the transactions online (thus, outside the municipality) and essentially reversing the standard cabbie/passenger dynamic: the passengers are pre-identified (to sign up, they needed a cell phone, a credit card and a valid address to go with it), and the drivers are unknown (except to the companies, which do little or no effective screening). The vehicles used are unlikely to meet the requirements for taxi use, and are often flat-out unsafe for drivers, passengers, or bystanders.
The companies start doing business anywhere they like, and fight against the requirements -- only if challenged -- with funds from their financial backers.
Municipalities are not happy about this, for both safety and financial reasons. Taxi owners and drivers, most of whom have invested considerable time and money to clear regulatory hurdles, are understandably upset at this end run around the law.
Imagine if Internet gun sellers showed up doing business in NYC or Washington, D.C. and claimed similar exemption from the local (highly restrictive) laws...
Actually, here in Mass. the goal of taxi companies it seems is to offer the lowest possible level of customer service, for the highest possible amount that can be legally charged. (Source: I drove for one such company for over a decade). Companies like Uber are a welcome change...
Except it was not Uber, who created those hoops. The taxis have suffered from the usual Big Government approach to business:
If we all had smart-phones 100 years ago, today's taxi regulations (and the various boards enforcing them) would not have been created. Which means, it is time for them to be abolished.
In Soviet Washington the swamp drains you.
* Price per mile is very similar, compared to other modes of transport such as bus or train.
At least here in Las Vegas, it ain't so... For example: A taxi from my house on the east side of Las Vegas to McCarran airport is gonna cost me right around $47, whereas an Uber trip from home to the airport is around $20, not to mention the fact that the last time I took a trip to the airport via Uber, I rode in a very nice, well kept SUV, and the driver was very personable. Whereas, the last time I took a cab to the airport, before Lyft/Uber came on the scene, I swore I'd walk before taking another cab in this town.. Overpriced, rude drivers, often don't show up when you call.... We NEED something like Uber/Lyft to provide some competition to taxicabs...
THANK YOU, Edward Snowden!! Americans owe you a debt of gratitude (whether they know it or not..)
Nobody is throwing you anywhere. Use the computer that you want. Use the phone you want. Use the services that you want. Uber can either support your system or not, as they seem fit, and you can use it or not.
What's your complaint? 'Oh, I can't use this nice service because I've crippled myself, so nobody else should be able to use it either' ?
The more people I meet, the better I like my dog.
The problem is that you're both right. The taxis are providing the service, the taxi companies are not. Taxi companies have long since adopted similar business models to Uber and Lyft: the drivers either bring (and maintain) their own car or rent it from the taxi company. The only service that the companies provide is a dispatcher, for which they take a hefty cut.
Consumers want to have a single dispatcher service that works anywhere and puts them in touch with a lot of taxi drivers. Uber provides something like this. The taxi companies don't want to, because this kind of thing naturally benefits from economies of scale: it's only slightly more expensive to provide a dispatcher service for the entire USA than for NYC.
If you really want to address the problem with a legislative fix then make every licensed taxi reachable via a single computerised dispatcher service and provide a well documented API for interacting with it. Provide (and fund out of the taxes on taxi fares and licenses) enough infrastructure that anyone can write an app that will hail any taxi in your jurisdiction and pay for it. If Uber wants to operate in your city, then they're free to do so by simply integrating their front end with your municipal back end.
I am TheRaven on Soylent News
The way you get a cab past inspection in NYC is to stick $200 in the visor. If it's there, it passes. If it's not, the "inspector" will pick some random pretext for rejecting the car. Don't even try to pretend cabs are any safer than Uber cars.
That's really the problem with Uber's business model (and by extension taxi companies' business model). They are providing a service to the driver - locating people wanting rides and disseminating that information to the nearest available driver. But instead of acting like a service and charging the driver a nominal fee, they insist on acting as the gatekeeper. They take in all the revenue, and disburse a portion of it back to the driver.
Uber isn't the end-game here. Some ride-sharing app which simply lets drivers and people looking for a ride link up for a nominal fee (like 25 cents) is going to be the end-game. It's like music. In the past, manufacturing and distribution were a huge part of their expenses. Today with digital media and the Internet, those expenses are almost zero. Likewise, in the past a lot of the expense and complexity for a taxi system was in matching up ride requests with drivers. Radios in the cabs were the first big breakthrough. Then GPS so the dispatcher didn't have to manually keep track of where the cabs were. Now cell phones (with GPS) and cellular Internet service have pretty much made the dispatcher obsolete. Heck, I wouldn't be surprised if a craigslist-like service ends up winning, providing the service essentially for free just because it can be done so cheaply.