Massachusetts Will Tax Uber & Lyft, Give Some Of The Money To Taxis

Image courtesy of Roger Schultz

Uber or Lyft will soon be supporting their biggest rivals in the Old Bay State, thanks to a newly signed law regulating the ride-hailing industry. In all, Massachusetts will tack on a $.20/ride fee for these newer companies, with the revenue being divided up between the state, cities, and the taxi industry.

Reuters reports that the law, recently signed by Gov. Charlie Baker, provides for $.05/ride to be put toward subsidizing the state’s taxi cabs.

Cities will receive $.10/ride, with the remaining nickel per ride going into a state transportation fund.

The state estimates that the new fees will raise millions of dollars a year, helping taxi businesses in Massachusetts to adopt new technology and better serve residents.

Larry Meister, manager of the Boston area’s Independent Taxi Operator’s Association, tells Reuters that the funds could first be spent on improving the organization’s smartphone app, or infrastructure changes.

The taxi subsidy will only be collected until 2021. At that time, the $0.20 charge will be split between cities and the state for five years. Starting in 2026, the fee will disappear.

The new law bars Uber and Lyft from charging this fee separately to their passengers. Of course, it’s likely the companies will eventually find a way to recoup this money from their customers.

While the ride-hailing services have to deal with forking over this new fee, it also opens the door for Uber and Lyft to legally pick up riders at Boston’s airport or convention center.

Still, some smaller companies have raised concerns about supporting their rivals. An executive for Fasten, a Boston-based ride-hailing startup, said his company shouldn’t be in the business of subsidizing competitors.

Massachusetts to tax ride-hailing apps, give the money to taxis [Reuters]

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