New York City Imposes Fees on All Ride-Hailing Services

Lawmakers passed a budget bill last Friday, in New York, which requires ride-hailing services and taxis to pay a new fee if they drive in Manhattan.  And, I must say, these aren’t small fees either.  Uber and Lyft are facing a $2.75 increase for each ride.  Taxis are going to see a $2.50 increase and group ride services like Via and uberPOOL will be charged $0.75 per customer.  The goal of this is to help with congestion problems and to fund subway repairs and improvements.  This kind of cash injection is expected to provide the MTA with $400 million per year going forward.

Is this the best approach though?  From a policy perspective, it’s critical when wanting to fund a project that you understand all the possible complications related to the policy change.  On the outset, this just seems like it will anger people due to the amount of money they will have to pay.  I phrase it that way because even if it’s Uber or Lyft who is responsible to pay for this “tax”, they will most certainly pass it onto customers.

To put this into perspective though.  Being a taxi cab driver isn’t advantageous anymore, because of ride-sharing companies like Uber and Lyft.  In New York City, the number of taxicab licenses is capped at 13,600.  But there are 65,000 vehicles in New York City driving for Uber.  Does that make sense to you?  I mean, it does and it doesn’t.  Taxi cabs have much higher standards that they have to meet, which is why the influx of Uber/Lyft makes this whole dynamic very interesting and a little bit concerning.

The tax is imposed by the City, though, isn’t going to target taxi rides, but all rides in general.  So at least the policy is being applied fairly.  That hasn’t stopped taxi drivers from voicing their concern.  Their argument is that people aren’t going to want to spend more money on rides, and they’re not wrong.  But when there are 103,000 vehicles on the road for hire, someone has to do something.  (Note, that doesn’t include people who own their own cars, or have drivers etc.)  Every city is being faced with the question of how to handle congestion.  While we might not agree with how they are proposing to make these changes, I don’t think it’s a horrible suggestion.

In fact, other cities have enacted their own surcharges for ride-hailing services, but they are considerably less than those that New York is implementing.  Seattle instated a $0.24 charge for each trip in 2014, Portland, OR agreed to levy a $0.50 fee per customer in 2016, both of which funnel money collected toward regulating ride-sharing services. Chicago passed one in 2014 that will reach $0.65 this year and directs part of the funds raised toward public transit, much like New York’s will.

If you think about it from a policy perspective, this is how things are done.  People pay taxes, and those taxes go towards things like infrastructure (roads, bridges etc.). It isn’t always the person who is using the road who has to pay for the use of the road (unless it has a toll associated with it).  But I think you can see where I’m going with this.  From a policy perspective, we have to find ways to allocate money in order to ensure that essential services are being taken into consideration.

I’m not saying that this is the answer to this problem.  But it’s one way of looking at it.  I think it’s important that we keep having these conversations to come up with other (and maybe better) solutions.  Congestion is not going away.  Maybe the solution is found in the car manufacturing industry?  While I don’t have the answer to this one, I am interested to see how this plays out as I think there might be a more creative solution.