Massachusetts is now the first state to tax companies like Uber and Lyft, more specifically, the state is taking money from those companies and using 25 percent of it to buoy the failing taxi industry.
The law mandates that a 20-cent fee be charged for every trip on a ride-hailing app. Five cents will go a state transportation trust, 10 cents will go to various cities and towns across the state, and 5 cents will go directly to the taxi industry, Reuters reports.
The fees allocated to the taxi industry are likely to be spent on “new technologies and advanced service, safety and operational capabilities,” according to the law’s language. In other words, the state government likely wants the taxi cab industry to adopt and implement the same technology that make Uber and Lyft so wildly popular.
Republican Governor Charlie Baker signed the law “supporting innovative transportation options” earlier this month.
“I don’t think we should be in the business of subsidizing potential competitors,” said Kirill Evdakov, the head of Fasten, a ride service that operates in Boston and Austin, Texas.
But this legislation was apparently a compromise, at least for the biggest players in the larger industry. Spokespeople for both Uber and Lyft praised the new regulations, perhaps because they view it as an affirmation of their legitimacy as a business.
“We are grateful for Governor Baker’s support and the Legislature’s effort towards creating a framework that embraces an innovative industry that has changed the way the Commonwealth moves,” Uber Boston General Manager Chris Taylor said in a statement, according to MassLive.
“We applaud Governor Baker for signing this common sense legislation, which sets high safety standards while supporting consumer choice and innovation,” Adrian Durbin of Lyft also said in a statement.
The law does not prohibit ride-hailing services to pick up patrons from transportation hubs like airports, which are often a protected stronghold for conventional taxis. Tom Glynn, who is in charge of the transportation system at Boston’s Logan Airport, told The Boston Globe that they never had “special rules for Uber” and that its rules always apply equally to everyone.
Many in the taxi industry wanted a outright ban, like the one that is currently in place in Portland. (RELATED: Demo Who Tried To Kill Uber Took Bundles Of Money From Taxi Industry [VIDEO])
“They’ve been breaking the laws that are on the books, that we’ve been following for many years,” manager of Boston’s Independent Taxi Operator’s Association Larry Meister told Reuters.
Edward Tutunjian, owner of Boston Cab company, pleaded guilty to several felony charges, including payroll tax evasion, employing illegal immigrants, and failing to pay overtime wages, The Boston Globe reports. This comes three years after the IRS raided Tutunjian’s taxi headquarter. Tutunjian has already agreed to pay $2 million in fines.
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