Slashdot Mirror
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.
...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...