New Massachusetts Law Hands Part of Uber Fare to Cab Companies

From the everyone’s a winner! file comes this story. Soon, whenever a Massachusetts resident hails an Uber, the state will hand part of their fare to their direct competition.

Reuters reports that Massachusetts lawmakers are poised to levy a five-cent-per-trip levy on ride-hailing apps like Uber and Lyft — a new corporate welfare initiative that is the first of its kind in the U.S.

Ride-hailing apps like Uber are the nemesis of taxi companies, which operate via a long-standing but inflexible business model. Cities that consider legalizing ride-hailing apps face widespread protests from cabbies, including Toronto, where one cabbie felt like going for a ride on the outside of an Uber sedan.

Often, the go-to plan is to simply regulate the ride-sharing apps out of business. We’re looking at you, Austin, Texas. In Massachusetts, the solution to avoid being seen as a modern, progressive state that shuns new technology and societal trends is to simply tax the new business (so no others suffer). It’s akin to placing a levy on Big Macs to keep the Home of the Whopper™ in business.

Massachusetts governor Charlie Baker signed the levy into law this month, part of a broader package of laws aimed at the ride-hailing. The levy goes beyond just propping up Uber’s competitors. One-quarter of the total levy goes to taxi companies, another quarter goes to the state transportation fund, and half goes to the municipalities.

Naturally, how the state’s portion will be spent hasn’t yet been decided on.

As you might expect, Uber and Lyft drivers aren’t happy about this. Kirill Evdakov, CEO of Boston (and Austin) ride-hailing service Fasten, told Reuters that he doesn’t think operators like himself “should be in the business of subsidizing potential competitors.”

Taxi companies approve of the new laws, though many feel they don’t go far enough. Their default position is that Uber and other such companies operate outside of the law, and should face severe scrutiny from law enforcement and regulators.

The state claims riders won’t see a bump in fees, as the law requires companies to pay the government directly, not through drivers or passengers. Of course, many feel that the cost will surely be passed down to customers. The taxi subsidy part of the fee runs through 2021, after which the 20-cent levy will be split between the state and municipalities until the levy disappears in 2026.

[Image: Jason Tester Guerrilla Futures/ Flickr]