Massachusetts may have fallen behind other governments when it comes to taxing Uber and Lyft. Now, Gov. Charlie Baker is proposing for the state to retake the lead.
In his annual budget proposal Wednesday, the Massachusetts governor included a fivefold increase in the state’s surcharge on ride-hailing companies from 20 cents a trip to $1.00 a trip. Baker’s proposal, which needs to be approved by the state Legislature, would designate 70 percent of the revenue from the surcharge toward transportation and 30 percent to local cities and towns.
The request comes after the Republican governor announced during his State of the State speech Tuesday that his budget proposal would increase the long-neglected MBTA operating budget by $135 million for the 2021 fiscal year, as the transit agency works to accelerate improvements to its bus and subway system. According to Baker’s office, the new $1-per-ride surcharge would generate approximately $73 million for the T (currently, the $0.20 surcharge is split between municipalities, the state’s transportation fund, and the taxi industry).
Baker’s office says the new funding would supplement the MBTA’s ongoing efforts to hire additional staff and contractors, speed up capital projects, and address safety and reliability issues. An outside report last month found that the administration’s efforts to cut costs to close the MBTA’s budget deficit had hamstrung those efforts.
In a statement, Baker said the proposal, which was generally applauded by transit advocates, would “make critical investments in the MBTA.”
Uber and Lyft, however, expressed opposition to the proposed surcharge increase Wednesday. While the companies say they share the goals of improving public transit, they argued that such an increase would disproportionately affect low-income residents in communities that are underserved by mass transit.
“A five-times increase on rideshare fees will not solve the transportation challenges in the state, and will hurt those who can least afford it,” Campbell Matthews, a Lyft spokeswoman, told Boston.com in a statement.
According to Lyft’s data, 55 percent of their rides start or end in low-income areas. And both companies argued that the main driver of traffic congestion in Massachusetts is personal cars; according to a state report last summer, ride-hailing companies accounted for only around 4 percent of all vehicle trips in the Boston area.
Rather, Uber and Lyft have both spoken out in support of charging tolls on all vehicles to reduce congestion in the Boston area — a solution that the Baker administration has steadfastly opposed.
“While the state’s own congestion report said that ridesharing accounts for only four percent of vehicle traffic, ridesharing must be part of the solution,” Uber spokesman Harry Hartfield said in a statement, which also expressed concern about “any proposal that would result in a substantial tax increase for riders.”
Hartfield noted that the company has recently worked with Boston Mayor Marty Walsh to install dedicated pick up and drop off zones in the Fenway and Seaport neighborhoods. For his part, Walsh has also supported increasing the state’s fees on Uber and Lyft trips to 6.25 percent, the same rate as the Massachusetts sales tax, or about $0.63 for a $10 ride.
In 2016, Massachusetts became one of the first places in the country to pass a surcharge on Uber and Lyft rides.
However, as The Boston Globe‘s Spotlight Team recently reported, the $0.20-per-ride surcharge has since fallen behind fees imposed by other governments, like Washington, D.C. (6 percent the cost of the ride) and Portland ($0.50 per ride). Seattle recently increased their ride-hailing surcharge to $0.75 a ride, and New York City imposes an additional fee of $2.75 on Uber and Lyft rides in Manhattan.
According to the Globe, the number of overall ride-hailing trips (including taxis) in Boston more than tripled from 2012 to 2018, amid the rise of Uber and Lyft. And while they may make up a small proportion of overall trips, transportation experts say that it doesn’t take much to cause cascading gridlock once roads have reached capacity.
In his speech Tuesday, Baker said companies like Uber and Lyft “provide a valuable service, but they clog our roads and operate with very little oversight.”
The governor also called on state lawmakers to approve a bill originally filed last year that would allow the state to collect more detailed data on where ride-hailing trips begin and end.
“Legislation that we filed will give us the information and the tools we need to better manage where they can go and when, so that they remain a vital but less disruptive part of our transportation community,” Baker said.