Uber, Lyft rides may be taxed under San Francisco measure

Ride-hailing customers may be forced to pay a new tax in the city where the disruptive industry got its start.

San Francisco’s board of supervisors voted Tuesday to put the question of taxing such rides on November’s election ballot. The measure, which was crafted with the cooperation of hometown companies Uber Technologies Inc. and Lyft Inc., could raise $35 million a year for transportation improvements if two-thirds of the electorate support it.

The proposal, backed by Mayor London Breed and Supervisor Aaron Peskin, would impose a 3.25 percent surcharge on individual rides and 1.5 percent surcharge on shared rides that start in San Francisco, taking effect next year until November 2045. All rides in electric vehicles would have a surcharge of 1.5 percent.

Uber and Lyft signs on cars in Times Square in New York
Uber and Lyft signages are seen at Time Square in New York, U.S., on Wednesday, May 8, 2019. Simmering tensions between drivers and ride-hailing companies are flaring again, as drivers in major cities across the U.S. and the U.K. went on strike Wednesday over low wages and unstable working conditions. Photographer: Jeenah Moon/Bloomberg

The effort is aimed at raising funds to ease traffic congestion that’s been partly blamed on the proliferation of Uber and Lyft drivers in San Francisco. A 2017 report ordered by city supervisors showed that ride-hailing companies accounted for about 15 percent of intra-city trips and as much as 25 percent of downtown trips during peak periods. On a typical weekday peak time, more than 5,700 of the vehicles cruise the streets.

Breed, in an interview last month at Bloomberg’s Players Technology Summit, called the measure “a responsible tax.” Since ride-hailing vehicles play a role in traffic, “the companies need to pay their fair share in that regard,” she said.

Uber and Lyft threw their support behind the ballot initiative after working with Peskin to moderate a more onerous version that he first proposed. The companies publicly supported legislation in the California legislature that paved the way for the initiative and are helping to fund the campaign on behalf of the ballot measure.

Uber is “pleased to reach an agreement that will bring dedicated transportation funding to San Francisco,” the company said in a statement. “We look forward to working with city leaders to ensure a successful campaign in 2019.”

Lyft said it looked forward to “further collaborating with city leadership to provide the best possible transportation to both residents and visitors alike.”

Ted Egan, San Francisco’s chief economist, estimated the tax would be a “mildly negative” hit to the city’s economy, equivalent to about losing 190 jobs over two decades, although he couldn’t quantify the impact of increased spending on transportation or of ameliorating congestion. Ride-hailing drivers are unlikely to bear the burden of the levies, he said.

“Rider fares should rise, irrespective of whether the tax is explicitly included in the customer receipt or not,” his report said.

— With assistance from Eric Newcomer