The rise of Uber and other on-demand ride services has impacted cities in various ways, and a fiscal-focused nonprofit has released a plan to mitigate at least one issue regarding the industry in New York: Change tax policy.
Uber is currently excluded from a mandatory 50-cent Metropolitan Transportation Authority tax included in New York taxi fares, and because of that, reports the Citizens Budget Corporation (CBC), the city is missing out on a major source of funding for public transportation development and upkeep — which it sorely needs.
The CBC released a report yesterday that points to a gap in MTA funding thanks to the decline in use of street-hailed cabs, and suggests that if companies such as Uber and Lyft complied with the 50-cents-per-ride tax it would help MTA fill the $2.6 billion budgetary gap in its proposed four-year funding plan.
The current tax is estimated to generate $250 million in 2015. Applying it to Uber and its ilk, the CBC reports, would generate an additional $33 million this year, possibly reaching up to $55 million by 2019.
However, the nonprofit also suggests that the fee could be changed to depend on total fare, rather than staying at a flat 50 cents:
When the taxicab tax was instituted in 2011, it represented approximately 4.73 percent of the average taxi fare. After increases in taxicab fares, the figure is 3.95 percent today. If the tax applied to black cars, including DSPs, were set at a rate, rather than an amount (50 cents), then the tax would be 3.95 percent of the fare. With black car fares averaging more than $27, their average tax would be about $1.00 rather than 50 cents. This new tax on black car riders would have generated an additional $70 million in 2015 and between $73 million and $117 million in 2019.
A third option would involve an overhaul of transportation sales tax.
(Credit: Citizens Budget Corporation)
“Cross-subsidies from motor vehicles should increase to pay for the MTA,” said CBC President Carol Kellermann in a press release. “Closing the funding gap in the MTA’s next capital plan is vital to the economic prosperity of the region, and rethinking how we regulate the increasingly dynamic services within the purview of the Taxi and Limousine Commission could be part of the solution.”
Marielle Mondon is an editor and freelance journalist in Philadelphia. Her work has appeared in Philadelphia City Paper, Wild Magazine, and PolicyMic. She previously reported on communities in Northern Manhattan while earning an M.S. in journalism from Columbia University.