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Uber and Lyft won a victory yesterday when the Oakland City Council voted against placing a rideshare tax on the November 2020 ballot. Users of the popular rideshare apps, who would have been on the hook to pay the tax, can also breathe a sigh of relief. But the decision means Oakland will forgo millions in tax revenue and that companies like Uber and Lyft will continue operating tax free in the city while other businesses, such as traditional taxis, will still pay taxes.
The tax measure, authored by Council President Rebecca Kaplan, would have imposed a 50 cent per-trip tax on users of rideshare services. The cost would be reduced to 25 cents for pooled trips in which multiple people ride in the same Uber or Lyft. The tax would have been paid by the passengers and not the companies because so-called transportation network companies can’t be taxed directly by a municipality in California due to state laws and regulation.
Kaplan said the tax is necessary to ensure all companies using Oakland’s roads contribute revenue to the city for maintenance and improvements. “I think it’s important to understand that all our other businesses pay a tax,” she said during yesterday’s council meeting. “This is closing a loophole in terms of tax fairness.”
Companies that failed to comply with the ordinance would have been subjected to a penalty of 25% of the amount owed, in addition to the original tax. They would also have had to pay an interest rate of 1% per month until the delinquent remittance was paid.
At the behest of her colleagues, President Kaplan incorporated amendments that included tax exemptions for youth trips, and a reduced tax rate for rides in zero-emission vehicles.
Oakland’s City Council had postponed the vote last week to see how Berkeley and Emeryville would vote on similar transportation tax measures. Berkeley opted to proceed with its ballot measure, while Emeryville voted no on their proposed ordinance.
Lyft spokesperson Campbell Matthews told The Oaklandside that the tax would unfairly impact the city’s most vulnerable residents. “City Council’s attempt to ram through new fees on rideshare trips will hurt those in Oakland, particularly those in low-income communities, living with disabilities, and in historically underserved areas,” Matthews said.
Recent surveys show, however, that it’s upper-income people who tend to use ridesharing apps like Uber and Lyft the most, while lower income people rely more on public transportation and other under-funded public services.
Councilmembers Lynette McElhaney, Loren Taylor, and Noel Gallo all said they were not supporting the tax proposal because of claims it would impact low-income people. “It obviously has an impact on those with less means, those who don’t have a car and less resources than others,” Taylor said in the meeting. McElhaney, Gallo, and Larry Reid voted no, while Taylor abstained. Councilmembers Kaplan, Nikki Fortunato Bas, Sheng Thao, and Kalb voted yes.
Kaplan has been trying for several years to create a tax on ridesharing companies. In 2018 a similar proposal was shot down when councilmember Reid and then-councilmember Annie Campbell Washington voted against the tax and McElhaney abstained during a committee hearing.
Lyft driver and Oakland resident Cherri Murphy believes Black and brown rideshare users should have more of a say about a tax that will predominantly impact them. However, she told The Oaklandside, rideshare companies “need to pay their fair share” and their current policies harm drivers.
She specifically mentioned rideshare drivers’ ongoing battle to defeat Proposition 22. If passed, Proposition 22 would undo a part of state law, AB5, which classifies app-based drivers, including those working for Uber, Lyft, and DoorDash, as employees instead of independent contractors. Drivers would then be legally classified again as contractors, allowing Uber and Lyft and other companies to pay them less and not offer health care and benefits.
Murphy, who is also an organizer for Gig Workers Rising, said Proposition 22 would take away “basic labor and human rights such as family sick leave, or sick leave in case someone contracts COVID-19.”
During yesterday’s meeting, Councilmember Thao said she supports taxing transportation network companies like Lyft and Uber but that it should be done in a way that doesn’t fall ultimately onto riders. “There’s a flawed system in place when we’re allowing big corporations and businesses to move these taxes through the consumer,” Thao said, “and that’s the bigger picture that needs to be addressed.”