Voters in San Francisco, California in November 2019 will consider a ballot question that would add a 3.25 percent tax on rides by peer-to-peer transportation network companies (TNCs) such as Lyft and Uber, two popular services connecting drivers and passengers through mobile phone applications.
Assembly Bill 1184 (A.B. 1184), sponsored by state Rep. Phil Ting (D-San Francisco), authorizes the City and County of San Francisco to ask voters in November 2019 to approve a 3.25 percent tax on trips originating in the city. Revenue from the new tax would be dedicated to “transportation operations.”
Gov. Brown signed A.B. 1184 into law on September 21.
Financial Pain by the Bay
A tax on ridesharing services would make living in already-costly San Francisco even more expensive, says Will Swaim, president of the California Policy Center.
“The Economist recently wrote a fairly definitive piece on the city’s appalling quality of life: the high cost of living; unaffordable housing because of limits on new home construction; failing city services; unfunded pension liabilities for public workers that boost the call for new taxes from government[-employee] union leaders; and the city’s worst-in-the-nation homeless crisis,” Swaim said.
“Taxes such as this one are like termites: They eat at the foundation of the community,” Swaim said.
Benefits Drivers, Passengers
Rebecca Stack-Martinez, a San Francisco resident and driver for Lyft and Uber, says she began driving for the companies in January in order to earn money on a flexible schedule.
“It was more out of necessity than out of interest,” Martinez said. “I was a full-time student doing a master’s program, and what attracted me to being a rideshare driver was the flexibility of being able to go when I did and having a vehicle that I didn’t really drive much, so it was like, well, I could put that to use and make some extra cash while I’m going to school.”
Ridesharing leaves both drivers and riders better off, by offering more choices for on-demand transportation, Swaim says
“They’re cheaper than taxis and especially good for tourists,” Swaim said. “Have you ever driven in San Francisco? It’s a horror show. Taxis were outrageous: a classic crony rip-off of the public. Uber and Lyft have forced every other business, including public agencies, to get better. The city that brags of its forward-thinking tech community frequently extorts those companies’ workers and customers.”
Questions Tax Incidence
Stack-Martinez says she’s concerned about how the proposed tax will affect her income as a driver.
“I’m concerned that it’s going to affect my bottom line,” Stack-Martinez said. “Who’s going to pay for that tax? I get that the passengers themselves are initially going to pay for that, but who’s taking on that tax? Is that going to then come from the drivers’ fees and fares, the portion that we’re earning—is that going to come out of there? Is that tax going to be added on and then be taken care of by Uber and Lyft, paying that out of their fees and what they’ve collected from the passenger? That’s kind of my concern.”
Stack-Martinez says drivers like her may be the ones stuck paying the new levy.
“Even if it is signed into law, I don’t think that law will stipulate to Uber and Lyft who ultimately is paying that tax in the end,” Stack-Martinez said. “I think the onus is going to be on Uber and Lyft to say, ‘We’re going to take this from the driver’s fare,’ or, ‘We’re going to tack it on top of the fare, collect the tax money, and then Uber and Lyft is going to pay that tax.”
Swaim says San Francisco’s elected officials seem to believe the answer to failed government programs is more government programs.
“San Francisco has been run for decades by men and women dedicated to the idea that each public policy problem is easily solved by a government program,” Swaim said. “When those programs backfire—and in San Francisco, they often do—the answer is invariably more self-sabotaging regulation.”