San Francisco May Slap Tax on Ride-Sharers

San Francisco voters could impose a per-ride tax on ride-sharing providers like Uber and Lyft and also their robo-taxis after the California legislature passed a bill allowing the city to take that step.

The tax could go as high as 3.25% on the net fare for an individual ride originating in the city, and 1.5% for a shared ride. It would help pay for transportation infrastructure and operations in the city, which expects a funding gap as it deals with increased traffic and new forms of mobility in the coming decades. Backers reached a compromise with Uber and Lyft to win their support for the bill. The net fare would not include the cost of bridge tolls. There could be another, lower tax rate for rides in zero-emission vehicles.

The bill, called AB 1184, was one of a pile of bills passed on the last day of the legislature’s two-year session. If Governor Jerry Brown signs it, San Francisco officials plan to put the tax proposal to city voters in November 2019, requiring a 2/3 vote to approve it. The plan needed state approval because unmetered ride services are regulated at the state level in California.

Legislators from San Francisco, led by Assemblyman Phil Ting, introduced the bill to help the city pay for infrastructure that ride-sharing cars use. Transportation network companies (TNCs) account for 20% of all vehicle miles traveled in the city on an average weekday, Ting’s office said in a fact sheet on the bill, citing a November 2017 study by the San Francisco County Transportation Authority. The study estimated there were 5,700 unmetered vehicles on city streets at peak periods.

San Francisco is home to both Uber and Lyft, along with many of the other so-called “gig economy” start-ups, including the delivery services Postmates and Instacart. A December 2017 poll showed 59% of San Francisco residents supported immediately imposing taxes on TNCs and other gig economy companies, the bill’s fact sheet said.

In addition to ordinary wear and tear caused partly by pre-booked taxis and autonomous vehicles, the tax revenue might help to pay for streetscape renovations designed to better serve a changing mix of transportation modes. The city wants to update streets that are mostly designed for private vehicles so they can safely accommodate more pedestrians, TNCs, public transit, private shuttles, bicycles, scooters and eventually autonomous vehicles.

San Francisco is already modifying roadways by adding separated bike lanes, widening sidewalks and installing sidewalk “bulb-outs” to slow traffic with an eye to pedestrian safety. It’s also setting aside dedicated lanes for transit vehicles. San Francisco has projected a transportation funding gap of $22Bn through to 2045.

Uber and Lyft, as well as the city’s Chamber of Commerce, supported AB 1184 but the R Street Institute, a public policy research organization that promotes free markets and limited government, vocally opposed the bill. The group said it would create a disincentive for the growth of TNCs and the development of autonomous vehicles in the city.

While promoters of ‘disrupter’ services say they can ease traffic and parking by reducing the number of private cars on the road, some critics say they may be increasing congestion. Autonomous vehicles for hire, which in theory could be stored in large suburban garages off peak hours, might also lead to more vehicles on the road as the vehicles roam waiting for pickups and consumers take advantage of potentially less expensive rides.

— Stephen Lawson is a freelance writer based in San Francisco. Follow him on Twitter @sdlawsonmedia.