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Uber, Lyft Rides Could Get a New Tax in San Francisco

May 22, 2019
3 min read
Uber, Lyft Rides Could Get a New Tax in San Francisco
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San Francisco's traffic is no joke. So to help assuage some of the gridlock, the city may be imposing a new tax on the companies that have been clogging its streets: ride-hailing apps Uber and Lyft.

City officials are considering a 1.5 percent to 3.25 percent tax per ride they say will help up San Francisco's congestion.

According to Intrix, San Francisco is the eighth most congested city in the United States, costing individual drivers about $1,624 last year. A new study shows that ride-hailing apps like Uber and Lyft, both headquartered in the San Francisco, are the root of the problem. The San Francisco Chronicle reports that "Uber and Lyft accounted for two-thirds of a 62% rise in congestion in San Francisco over six years." The city sees the tax as a necessary route to addressing the problems that Uber and Lyft have imposed.

The San Francisco County Transportation Authority and the San Francisco Municipal Transportation Agency would earmark the tax revenue for transit projects, including fixing bike lanes or improving traffic enforcement.

San Francisco Mayor London Breed co-sponsors the proposal, saying, “by working collaboratively with the business community, our state leaders, and transportation advocates, we have come up with a tool that can mitigate congestion, fund public transportation and create safe streets for all."

The tax has the potential to raise between $30 million and $32 million each year. The 1.5 percent to 3.25 percent tax on each ride would begin in January of 2020, and the amount to be levied would depend on the ride type.

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Electric cars will get a lower rate, hybrids would get a higher rate and para-transit vehicles would not be taxed. While the tax would give a break to more ecologically friendly vehicles, certain groups think that the break should be greater — even below the 1.5 percent mark — so as to encourage the use of electric cars.

The tax would be independent from other charges that the apps include, like tolls and tips.

The initially proposed plan taxed the companies' gross receipts, but Uber and Lyft's support leaned toward the revised version. Although the companies and the city haven't had a flawless relationship, they've exercised mutual cooperation in this endeavor. The companies supported a state measure allowing the city to tax them, and they've now both released statements in support of the the supervisor's tax plan.

The proposal will be voted on by San Francisco constituents in November, where it'll need two-thirds of votes to pass. In order to make it to the ballot, though, the proposal needs six votes from the Board of Supervisors.

There's a possibility that this won't be the only incoming tax for Uber and Lyft. Supervisor Gordon Mar recently proposed a stock-based IPO tax that would affect the companies as well.

Featured image by Bloomberg via Getty Images