The Washington PostDemocracy Dies in Darkness

D.C. Council’s vote to increase ride-hailing tax will probably mean higher Uber and Lyft fares — to support Metro

The D.C. Council voted unanimously Tuesday to raise a tax on ride-hailing companies such as Uber and Lyft. (Lucy Nicholson/Reuters)
Placeholder while article actions load

The D.C. Council voted unanimously Tuesday to raise the tax on ride-hailing services such as Uber and Lyft, as part of a plan to raise $178.5 million in new funding for Metro — the District’s share of $500 million in regional dedicated funding.

The vote increases the tax on ride-hailing companies’ gross receipts from 1 percent to 6 percent, meaning what is normally a 10-cent tax on a $10 ride will now cost riders $0.60. City officials note that it is a revenue tax that does not have to be charged directly to passengers, but ride-hailing companies have indicated that they will tack it directly onto fares.

Why D.C. is targeting the ride-hail industry

The tax increase, which would raise about 10 percent of the new Metro funding, passed amid opposition from Uber, Lyft and Via, and some smart-growth advocates who had called for a tiered system that would exempt pooled rides from the fee increase. In the wake of the bill’s passage, D.C. Council member Brandon T. Todd (D-Ward 4) announced he was preparing a bill to introduce a tiered tax — although details were not immediately available.

Uber applauded Todd for his upcoming bill, but the company expressed disappointment with the council’s decision Tuesday.

“While the D.C. Council missed a good opportunity to set a national example by taxing congestion-reducing carpooling options like UberPOOL at a lower rate than single-passenger trips, we’re eager to continue working with Mayor [Muriel E.] Bowser, Council member Todd, and other forward-looking leaders on smart policies that give District residents alternatives to owning or driving their own cars,” Uber spokesman Colin Tooze said. The company says it is not a public transit competitor and supports dedicated funding for Metro.

As ride hailing booms in D.C., it’s not just eating into the taxi market — it’s increasing vehicle trips

Still, Metro is studying the impact that ride-hailing services have on its ridership, and a range of studies has shown that between 15 to 30 percent of Uber and Lyft trips would have otherwise been taken using transit.

The council justified the tax increase plan when it outlined its budget proposal in May, arguing ride-hailing companies “contribute to traffic congestion, add wear and tear to the District’s roads, and there is evidence that they draw people away from public transit.”

But the council’s version of the tax drew opposition from Bowser (D), who backed the tiered system favored by the companies. Bowser’s initial proposal, the original plan to raise taxes on ride-hailing for Metro, would have taken the tax from 1 percent to 4.75 percent.

Beyond the tax, the measure — the 2019 Budget Support Act — also cements a broad array of data-sharing requirements that have been championed by advocates pushing transparency from the firms. Ride-hailing companies will be required to submit data to District officials on how many drivers they have, the amount of vehicle miles driven on their platforms, and anonymized logs on rides booked through the apps — which would include the prearranged pickup and destination points for each trip, for example.

The budget goes into effect in October.

More on this issue:

Bowser proposes tax increases, including on Lyft and Uber rides, to pay for Metro

D.C. Council would hike tax on Uber and Lyft more than Mayor Bowser proposed

D.C. Mayor Bowser, Uber break with council on ride-hailing provisions in budget