Uber and Lyft have agreed to pay a percentage of tax on San Francisco trips towards transportation funding.
San Francisco has reached a deal with ’transportation network companies’ (TNCs) Uber and Lyft, allowing the city to tax a percentage of their net ride revenues and use the money towards transportation infrastructure and operations.
A shift in corporate culture?
The local tax, proposed for the 2019 ballot, would apply a 3.25 percent tax rate to single-use rides and a 1.5 percent tax rate to carpool share rides across the industry, including autonomous vehicles once they are permitted to charge for rides. The tax would sunset in 2045, and is expected to bring in roughly $30 million in the first few years, and more in the future. The tax revenue would be paid to the San Francisco County Transportation Authority (SFCTA), the congestion management agency for the City and County of San Francisco.
“This is a win-win for everyone,” said Supervisor Aaron Peskin, who also chairs the SFCTA board. “We have a $100 million local funding obligation to meet the transportation demands of a growing city. Voters have made it clear that they want corporations to pay their fair share to meet that need, particularly when there is a nexus to issues like congestion and traffic. I’m optimistic that this concession on the part of the TNCs signals a shift in their corporate culture and a willingness to work with – not fight with – local governments.”
The terms of the deal include successfully moving state-enabling legislation before the end of this session, which would confirm San Francisco’s authority to levy a local tax on TNC and future autonomous vehicle trips and have the dedicated funding be remitted to the SFCTA.
“San Francisco streets are more congested and crowded than ever. As we build more housing and add more jobs in San Francisco, we must invest in public transit and transportation infrastructure so we can move more people around our city in the fastest and safest way possible. We need the additional revenue to make these critical transportation investments and improvements,” said Assembly member Phil Ting, who will author the state legislation.
The cost of congestion
San Francisco is one of the top three most congested cities in the United States. A recent study by the SFCTA estimates that Uber and Lyft combined average about 82 million trips annually, with up to 90 percent of TNC drivers coming in from outside the city, some driving from as far away as the Oregon border just to pick up lucrative fares in San Francisco.
The SFCTA study also found that up to 26 percent of peak commute-hour trips are made by TNCs in the most transit-rich areas of the city. A separate study from the former New York Deputy Traffic & Planning Commissioner, Bruce Schaller, found that TNCs create more than double the amount of traffic as compared to non-TNCs in major US cities.
San Francisco’s Transportation Task Force 2045 (TTF20145), co-chaired by Supervisor Peskin and the late Mayor Lee, identified that $22 billion will be required over the next 27 years to build out critical city-wide transit infrastructure and services, as well as pedestrian and bicycle safety facilities.
“Lyft and Uber have an outsize impact on our city’s streets, adding tens of thousands of additional vehicles in conflict with our Transit First policy,” said Brian Wiedenmeier, Executive Director of the SF Bicycle Coalition and member of the TTF2045. “It’s only logical that our city, like many others around the country, make them pay their fair share in order to maintain and improve the streets they drive on, and I’m pleased to see them step up and do the right thing.”
SFCTA Executive Director, Tilly Chang, added: “While there is still a ways to go, this is a critical first step and commitment on behalf of both the public and private sectors.”
What Uber and Lyft say
“Uber is pleased to reach an agreement that will bring dedicated transportation funding to San Francisco,” said Alex Randolph, Uber’s policy lead in Northern California. “We appreciate the constructive and good faith negotiations with San Francisco lawmakers and we look forward to working with city and state officials to ensure a successful campaign in 2019.”
"Lyft is focused on improving transportation in cities and we recognise the importance of reliable transportation in San Francisco,” said Lyft official, Brian McGuigan. “We are glad to have arrived at a solution that will help keep ride-share convenient and affordable and look forward to continuing these conversations with city and state officials."