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Taxis Become Beneficiaries of New Massachusetts Uber Tax

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The ongoing battle between established taxi companies and ride sharing drivers for Uber and Lyft continues on the streets of America’s largest cities. One state, Massachusetts, decided to pass a new law that not only makes operations by Lyft and Uber more expensive, but actually subsidizes the struggling taxi industry.

According to Mashable, the state will charge $.20 per ride as a fee to any ride-hailing company. The state says that the fee is supposed to be paid by the businesses themselves, not the customers (although we don’t see how the state can stop rate rises to compensate). If all goes to plan, five cents of the fee goes to Massachusetts’ Department of Public Utilities, and ten cents will go towards transportation infrastructure in the state’s municipalities. The last five cents of that fee, however, will be given to the taxis that are struggling thanks to the popularity of the new smartphone ride apps.

The contribution to taxi companies makes Massachusetts one of the first states to subsidize its traditional taxi businesses. It has not been specified how the money collected will be spent, and the law leaves the door open to interpretation.

Uber seems to be taking the new tax fairly well. That could be because 75% of the fee is going towards things that should benefit all drivers, regardless of what company they drive for. This state-wide tax also makes taxing the companies in Massachusetts easier, providing one rate per ride in all cities and towns instead of changing rates from each town.

Currently, Uber and Lyft have a large presence in Boston, as well as in the western portions of the state. We imagine that many states are watching the success of this tax as they consider what to do in their own states to both help struggling taxi operators and earn money from the new businesses’ operations.

News Source: Mashable