Taxing Uber & Other TNCs Is A Bad Idea

Recent traffic increases in some cities have been attributed to increased demand from use of app-based transportation network companies such as Lyft and Uber. In response, Chicago has implemented a tax on these trips, aiming to dedicate revenues to mass transit improvements, and New York is about to do the same. While it makes intuitive sense to focus on such services in traffic reduction efforts, the TNC industry is starting to scale towards carrying more passengers per vehicle. A tax on all such trips would not only complicate this shift – it might end up creating more private car trips.

While hardly an unbiased observer, shared-ride provider Via is spot on when it points out that this tax will make it more difficult for “microtransit” options to emerge. It would also allow the entrenched Uber and Lyft to solidify market share. Such a perverse effect would be similar to how exceptions were carved out for TNCs in many cities without similarly deregulating radio-hail taxis. Eliminating the medallion system, for instance, could have allowed for innovations in shared-ride taxi services. It will also limit access to transportation for people living in areas not well served by the transit system, especially in less well-off “transit deserts” found in New York City’s outer boroughs.

The hope is that the increased prices will drive people onto buses and subways, but this will be of little help to commuters whose trips aren’t well served by the transit system. Even dedicating the revenue to mass transit doesn’t guarantee improved use, because what matters is the kind of investments (and whether costs can be controlled.)

Moreover, simply because TNCs are currently increasing congestion doesn’t mean that discouraging them will result in less overall crowding. A tax which applies to only one type of trip will free up space on the road, which is likely to be filled by trips which are not taxed – private car trips.

Broad-based congestion charging is the only answer to traffic congestion. Taking shots at Uber and Lyft is politically popular, but it doesn’t address the problem, and might make it worse.

Ethan Finlan
Ethan Finlan is a writer and sketch comedian based in the Boston area.