Under a proposed ballot measure, passengers would pay a per-pickup charge through ride-hailing apps like Uber and Lyft. The funds could pay for transportation improvements or other services
Darwin BondGraham | East Bay Express
Five years ago, the California Public Utilities Commission issued a decision giving itself almost exclusive regulatory authority over transportation network companies like Uber and Lyft. Ever since, local public officials throughout the state have assumed cities’ hands are tied when it comes to creating rules governing the burgeoning ride-hailing industry, which is now worth billions.
But according to Oakland City Councilmember Rebecca Kaplan, there is one thing that cities have the power to do when it comes to ride-hailing services: tax them. “The power to tax is a separate power regardless of whether or not you can regulate something,” said Kaplan in an interview last week.
Kaplan is proposing that the city council put a measure on the ballot to impose a tax on all trips taken in Oakland using ride-hailing apps like Uber and Lyft. If approved by voters, the measure’s funds could be used to offset negative impacts that ride-hailing services inflict on the local transportation system or pay for infrastructure like roads, she said.
“They’re using our streets to do business, and we don’t currently have any revenue from it,” Kaplan said. A per-pickup charge could raise anywhere from several hundred thousand to millions of dollars per year for the city.
Other city officials haven’t taken a position on whether to tax the ride-hailing industry, but the idea isn’t new. Oakland officials have been discussing possible ways to tax transportation network companies like Uber and Lyft since 2015.
However, it’s not clear whether cities and counties can legally tax ride-hailing services. Currently, no city in California taxes them, and only airports are explicitly permitted under state rules to impose pickup and drop-off fees. For example, Oakland International Airport charges a $3.70 fee for pickups and drop-offs and doesn’t allow drivers to linger inside the airport’s property. San Francisco’s airport has a $3.80 charge. City of San Francisco officials have also recently been discussing a possible tax, but they’ve yet to take action.
California, in many ways, is behind the curve. Boston collects a 20-cents-per-trip tax that goes into an infrastructure fund. Chicago charges a 40-cents-per-trip tax and an extra 10 cents that goes into a special fund to subsidize wheelchair accessible services. Seattle also has a wheelchair services surcharge and a per-trip fees ranging from 14 to 35 cents.
Oakland currently has a $443 million backlog of repaving work that it needs to complete on its streets. And the city’s department of transportation is lightly staffed and overwhelmed with transportation planning work and the task of looking after the growing number of privatized transit systems in the city. Any new tax revenues from ride-hailing companies could help pay for these needs. Or, they could be directed in ways that improve public transit services like buses, BART, and more.
Hana Creger, who is with the Oakland-based Greenlining Institute and studies transportation and transit policy, said services like Uber and Lyft are “artificially cheap” for riders, because the companies have managed to avoid the regulatory and tax powers of local governments for so long while pushing costs on the independent contractors who serve as their drivers.
“There are many hidden consequences,” said Creger. “Riders can’t necessarily see them when they pay, but Uber undercuts taxis and public transit, and they don’t have to pay benefits to their employees, while at the same time they’re using public roads for free.”