A Tax on Ride Sharing Companies Hurts Working People Most

A Tax on Ride Sharing Companies Hurts Working People Most

“Government’s view of the economy could be summed up in a few short phrases,” said Ronald Reagan, “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

Uber and Lyft are on the move. And guess what? Government tax collectors are hot on their trail.

Last week, Los Angeles County’s Metropolitan Transportation Authority voted unanimously to explore a tax on ride sharing companies like Uber and Lyft, including looking at the impact of charging drivers a “congestion fee.” L.A.’s transit ridership has fallen by 20 percent over the last five years and transportation officials blame it partly on Uber and Lyft.

“We can’t move fast enough in dealing with achieving some revenues from industry,” said L.A. Councilman Paul Krekorian, who is also a Metro board member. “If we don’t put in a fee, we are subsidizing automobile transit at the expense of public transit.” Mr. Krekorian ought to remember the fact that it’s drivers and ridesharing passengers – the taxpayers – who are subsidizing public transportation. And despite this, they still reject it.

Take me. My old car’s transmission gave out last year, so I thought I would give public transportation a try. To visit my mother in the South Bay, I took the Gold Line, switched to a bus at Union Station in downtown Los Angeles, which took me south to the Harbor Gateway Transit Center, where my brother picked me up. It was about $3 a trip but double the time.

The ride on that L.A. bus line turned out to be one of the most stressful rides I’ve ever taken. Drunk and drugged-out people would come in and out of the bus, often yelling obscenities or mumbling unintelligible words. Many would walk on the bus and never pay. In many cases, the bus drivers don’t even bother to confront them. I don’t blame them. Why risk his and the safety of a few riders for a few dollars? I toughed it out for about a dozen trips until giving up and taking Uber or Lyft. I applaud the courage of those bus drivers.

The bottom line is that many people, especially on some routes, don’t feel safe. An Uber or Lyft ride from Pasadena to the South Bay, at about $35, is more than ten times the cost of taking the train and bus. And I am not alone in willing to pay up, I usually share rides with women who are picked up and dropped off at Los Angeles’ poorest neighborhoods. It’s these working women and their families that the tax on Uber and Lyft rides will hurt the most.

Instead of commissioning a study to figure out how to tax riders, city officials should focus on understanding why people avoid L.A.’s transit system in the first place and fix those problems. Some of the obvious ones include making the system safe and clean for riders. For city officials, it also means confronting addiction, crime, and homelessness head on. Don’t tax transportation that works to subsidize one that doesn’t.

Rowena Itchon is senior vice president of the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.