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Sorry, Jason Derulo: Riding solo may not be the way to go if a D.C. lawmaker gets his way.
Under legislation that Ward 4 Councilmember Brandon Todd introduced on Tuesday, shared rides via ride-hailing services like Uber and Lyft would be taxed at a lower rate than single rides would be taxed. Rates of 1 and 6 percent on ride-hailing companies’ “gross receipts” would apply for shared and single rides, respectively, when rides originate in the District.
Assuming the companies fully pass these prospective taxes on to riders, a $10 shared ride would cost $10.10 while a $10 single ride would cost $10.60. As of now, all ride-hailing rides are taxed at 1 percent of companies’ gross receipts.
Todd’s bill would reverse a flat, 6 percent tax on ride-hailing companies’ gross receipts that the D.C. Council approved in the District’s fiscal year 2019 budget, which begins in October. That higher tax rate—yet to go into effect—would help provide Metro dedicated funding of $178.5 million a year on the District’s part.
“Ride-hailing services such as Uber and Lyft contribute to traffic congestion, add wear and tear to the District’s roads, and there is evidence that they draw people away from public transit,” wrote D.C. Council Chairman Phil Mendelson‘s Committee of the Whole in its May report on the budget bill. “The Council believes that such services should be taxed at the same rate as other services.”
Ride-hailing companies raised objections to the 6 percent tax rate when the Council marked up the budget, saying it would make it difficult for low-income residents to use their services and discourage people from taking shared rides. Mayor Muriel Bowser—who had proposed a flat 4.75 percent tax on ride-hailing services in her budget recommendations this past spring, but then opposed the Council’s changes—also made those points.
In late June, Todd promised to introduce a bill to eliminate the flat tax rate that was passed in the budget. “I am disappointed that we were not able to make a distinction between shared rides and single rides,” he said during a council meeting on Tuesday, adding that shared rides reduce traffic congestion and auto emissions, among other benefits.
D.C. would join New Jersey and New York among jurisdictions that have tiered tax systems for ride-hailing rides, Todd said. A hearing on his legislation could take place this fall. Five other councilmembers preliminarily support it: Ward 1’s Brianne Nadeau, Ward 6’s Charles Allen, Ward 7’s Vince Gray, Ward 8’s Trayon White, and At-Large Councilmember David Grosso.