New Tax on Ridesharing will go to Taxis

Massachusetts Governor Charlie Baker signed a law into effect this month that will levy a 5-cent fee per trip on ridesharing companies such as Uber and Lyft, which will go to the taxi industry. The first of its kind in the U.S., the nickel fee is part of a sweeping package of regulations for the industry.
Not surprisingly, the Ride Service Industry is not happy about the fee. Kirill Evdakov, the chief executive of Fasten (a ride service that launched in Boston last year) said, “I don’t think we should be in the business of subsidizing potential competitors.”
Some taxi owners wanted the law to go further, banning the start-up competitors unless they meet the same requirements as taxis, such as regular vehicle inspection by the police.

The law levies a total fee of 20-cents, with 5 cents for taxis, 10 cents going to cities and towns and the remaining 5 cents designated for a state transportation fund.

The fee has the potential to raise millions of dollars per year, as Uber and Lyft complete a combined 2.5 million rides per month in Massachusetts.
Regulations for collecting the fee and how it will be spent are in the works, said Mark Sternman, a spokesman for the state’s Mass Development Agency,(the entity in charge of the money). However, the companies themselves will be responsible for paying the state, so that the riders and drivers will not be responsible for it.
Authorities worldwide are struggling to regulate and tax the ride-hailing industry. Seattle passed a law allowing drivers to unionize. In Taiwan, Uber is battling a tax bill of as much as $6.4 million.
Ride Sharing services in Massachusetts have accepted the fee in exchange for other provisions. For instance, the law doesn’t ban them from picking up at Boston’s Logan airport or the Boston convention center, although there will be special rules for those sites.
The 5-cent fee will be collected through the end of 2021. Then the taxi subsidy will disappear and the 20 cents will be split by localities and the state for five years. The whole fee will go away at the end of 2026.

New legislation and regulations are being proposed for the Ridesharing Industry on a daily basis. McSweeney & Ricci will keep you informed of any developments with regard to Rideshare and is always available to discuss any coverage questions you may have.

Remember to inform us if you are driving for or using your vehicle for rideshare purposes, as we want to make sure you are properly covered. For more information on insurance coverage for Ridesharing, contact McSweeney & Ricci’s Rideshare insurance expert Dan Wheeler.

Article Credit: Aug 22, 2016 Insurance Journal-by David Ingram