The District of Columbia (DC) council has imposed a 5% tax on rideshare trips to fund the city’s ailing subway system.
The cost of an Uber or Lyft ride in the nation’s capital will increase from 1% to 6%, Traveler’s Today reported. The increased expense is not that great, the measure will add $1.50 to a $25 ridesharing trip.
Anybody that can afford a $25 rideshare trip will probably not notice the tax. The tax affects any Lyft or Uber ride that begins or ends in Washington D.C.
Can Lyft and Uber Fund Mass Transit?
The hope is to raise $23 million to $25 million a year to fix Washington’s crumbling subway system the Metro.
The Metro has been plagued by equipment failures, safety problems, and stations that are literally falling apart. The tax might do little to help because most of the Metro’s problems stem from mismanagement, rather than underfunding.
The system is plagued by bureaucracy and inefficiency American Conservative writer James Brovard charged. Dumping more money into it without serious reforms may have little effect.
Expect to see Uber and Lyft Taxes everywhere
Increased taxes on digital services like Uber and Lyft will become commonplace. Such taxes are the inevitable result of technological transformation and rising income inequality.
The middle and working classes are increasingly upset about declines in basic government services like transit. Meanwhile, frustration grows as digital services like ridesharing and same-day delivery allow the rich to opt out of traditional transportation systems.
Middle class people stuck in traffic or trapped on defective trains are envious of the affluent woman in the Uber. After all, she is probably catching up on her work and sipping a late on her way to work.
Making such people pay extra for some of their luxuries seems like a reasonable accommodation. The battle will probably come from the rate of taxation imposed.
Is Washington’s Tax Good for Lyft and Uber?
Strangely enough, Washington’s tax might be very good for Lyft and Uber. Transforming ridesharing into a revenue source gives local governments a strong incentive to promote the practice.
Efforts to ban or restrict Uber will fall on deaf ears at city council meetings. If the councilors are looking at the big checks those companies are writing to the city treasury.
Taxing Uber and Lyft now before self-driving rideshares and flying taxis become common place is a smart move. If the wealthy want to opt out of the common transportation system, make them pay for the privilege.
Expect to see lots of taxes on ridesharing; and other digitally-powered gig-economy services, that benefit the affluent in the years ahead. Average people are sick and tired of paying for the leisure class’s creatures comforts and they know how to vote.
Smart gig-economy operators will welcome the new taxes. Such levies can turn government from a foe into a powerful ally that can easily silence the Luddites.