Uber and other ride-sharing services to be taxed in Massachusetts, money to go to taxi industry – report

It’s not just us, apparently – many countries around the world have been working on the recent problem of bridging the divide between newfangled ride-sharing services like Uber and the traditional taxi industry. Case in point – Massachusetts will soon enact a law to charge a 20-cent (80 sen) fee on every ride-sharing, uh, ride, with five cents (20 sen) of which going directly to cabbies.

According to Reuters, the ruling was signed by Republican governor Charlie Baker as part of a series of sweeping regulations for the industry. Also part of the fee, 10 cents (40 sen) goes to cities and towns, while another five cents will be channeled into a state transport fund.

The money going to the taxi industry is meant to help businesses adopt “new technologies and advanced service, safety and operational capabilities” and to support workforce development. The news agency said that the fee has the potential to raise millions of dollars a year, as Uber and Lyft alone have a combined 2.5 million rides in Massachusetts every month.

Spokesman for the state’s MassDevelopment finance agency Mark Sternman said that legislation with regards to how to collect the fee and a plan on how it will be spent still needs to be drawn up – the agency is in charge of the money that will be picked up from each ride.

As expected, ride-sharing service operators aren’t happy about the fee. “I don’t think we should be in the business of subsidizing potential competitors,” said Kirill Evdakov, chief executive of Boston-based service Fasten, which launched last year. Although drivers and riders won’t see the fee – the money will be paid by the companies themselves – Evdakov claimed that it will be passed on to them in one form or another.

Reuters said that some taxi owners wanted the law to go further, such as banning these services unless they meet the requirements that taxis do, including regular vehicle inspections by the police. “They’ve been breaking the laws that are on the books, that we’ve been following for many years,” said manager of the Boston area’s Independent Taxi Operator’s Association Larry Meister.

It’s not all doom and gloom for ride-sharing services, however – the law has other provisions for them too. For example, it doesn’t ban them from picking up passengers at Boston’s airport or convention centre, although it is said that these sites will have their own special rules. Lyft spokesman Adrian Durbin said that the company is pleased with the law, even though it is not perfect.

The tax won’t go on forever – the five-cent fee that goes towards taxis will be abolished by end of 2021, after which the fee will be split by localities and the state until the whole thing disappears at the end of 2026.

The move is but one of the ways that authorities are looking at regulating and taxing ride services. Seattle passed a law that allows drivers to unionise, while Taiwan will tax Uber up to US$6.4 million (RM25.8 million) due to a change tax structure for international online businesses.

Closer to home, the Malaysian cabinet has approved the Land Public Transport Commission’s (SPAD) Taxi Industry Transformation Programme (TITP), which will legalise and regulate the “e-hailing” industry. From September 1, drivers will be required to obtain a driver’s card from SPAD and be subjected to mandatory roadworthiness inspections. Regulations will also be imposed on e-hailing companies and drivers to ensure that legitimate policy objectives like compulsory insurance coverage and safety requirements are met.

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