The D.C. Council voted unanimously last month to increase taxes on ride-hailing services from 1 percent to 6 percent and use the additional revenue to cover some of the District’s Metro funding share. (The rest of the share will be covered by increases in the general sales tax and commercial property tax.) The hike would raise an estimated $23 million per year, bringing the tax rate for these services in line with the general sales tax and the fees currently levied on taxis. Though it has been criticized by ride-hailing companies and drivers who balk at the higher rates, the proposal is a common-sense move to sustain the region’s transportation system and address the potentially disruptive effects of Uber, Lyft and other services. The District is joining an increasing number of cities and states that have enacted similar fees, including New York state, Chicago, Seattle and Massachusetts.
Opponents of the tax increase argue that it would disadvantage low-income residents and unfairly hold ride-hailing firms responsible for the region’s ailing public transit. But a 2017 report
from researchers at the University of California at Davis studied seven metropolitan areas, including Washington, and found that ride-hailing services were disproportionately used by wealthier passengers. It also found evidence that they were drawing passengers away from local bus and light-rail systems that serve a broader clientele.
These findings were backed up by recent data from Mayor Muriel E. Bowser’s (D) office, which showed that Metro and taxi ridership have fallen dramatically while the city’s ride-hailing market has steadily expanded. According to the analysis, the ride-hailing boom may have created thousands more vehicle trips per day and contributed to local traffic congestion. If services such as Uber and Lyft are siphoning revenue from Metro and also exacerbating the city’s traffic problem, it is only fair that they play a part in the solution.
There are still proposals on the table that could make the tax hike more equitable and efficient. For example, D.C. Council member Brandon T. Todd (D-Ward 4) introduced a bill Tuesday that would lower taxes on pooled rides. This proposal, which could keep ride-hailing options affordable for low-income residents, is worth considering if there are ways for the city to make up the revenue elsewhere. But on the whole, the decision to tax ride-hailing services appears to be a sensible choice.