Uber, Lyft: “Council may choose to create a more complex structure that would use a variable tax rate or surcharges…”

Earlier we wrote about Seattle’s proposed ride-share tax, described by some as a “head tax on wheels.” Since then, we’ve seen additional discussion of the proposal by the Washington Research Council and SCC Insight. Both reference a staff analysis of the proposal that will interest those concerned with congestion and taxation in Seattle. 

The WRC writes,

The Council’s staff memo on the proposal includes some notable points:

If the Council adopts the Mayor’s proposal, combined taxes and fees on these companies would increase from $0.24 per ride to $0.75 per ride on July 1, 2020. The City Budget Office (CBO) estimates that this would result in 947,718 (2.9 percent) fewer rides in 2020 and 2.1 million (5.6 percent) fewer rides in 2021 than would otherwise be expected. (The estimate also assumes that $4 would be added per ride as a result of the Mayor’s separate proposal on minimum compensation for TNC [transportation network companies, i.e., the ride-share providers] drivers.)

There’s a lot of discussion of how much money would be raised and how it would be spent. The WRC highlights a key paragraph in the staff analysis, indicating how fluid the projections may be. 

As for the structure of the proposed tax, the staff memo notes that it is a flat rate per ride and “uses data the City already collects from TNCs.” But,

Council may choose to create a more complex structure that would use a variable tax rate or surcharges to achieve other/additional policy objectives. For example, a higher tax rate during peak times or by geography may reduce the impact of TNCs on traffic congestion during specific times or in certain areas. A variable rate or surcharge for a single rider compared to a “pool” or shared trip could encourage higher occupancy vehicles. A flat rate per mile could discourage longer trips.

As we wrote in our earlier post, ride-share companies have become targets from California to New York City. Add Chicago to the list. The Chicago Tribune reports,

[Mayor Lori] Lightfoot saved the toughest line of her speech for ride-share companies like Uber and Lyft, who have been critical of her so-called congestion tax. She singled out the “multimillionaire owners of those companies” for essentially having “free rein” of the city under Emanuel.

“If they cared as much about equity as they say, they would cut their drivers in on a bigger share of profits, improve their working conditions, and not pass their costs on to them,” Lightfoot said.

Under her plan, Lightfoot will seek to more than triple the tax charged on most solo ride-share patrons heading in and out of downtown Chicago as part of a plan to bring in $40 million more a year. The city also would hike the tax on solo riders using such services elsewhere in the city by 74%.

Referencing that figure, Uber released a statement hitting back at the mayor.

“There are ways to reduce congestion and raise revenue that don’t include an 80% tax increase on rides nowhere near downtown,” the company said. “Those traveling in transit rich neighborhoods should pay more in taxes than those with more limited options.”

As Alberg and Mistele wrote in the op-ed we cited earlier,

There are special interests who would be happy if ride sharing could be curtailed. But the only special interest of City Hall should be the welfare of average citizens. Ride shares alone won’t solve our transportation problems, of course, but they can contribute to overall improvements. So why handicap them?

Again, good question.