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Massachusetts will tax Uber with a new law that uses some of the fees to support the traditional taxi industry.
The state is introducing a $0.20 per-trip fee for ride-hailing companies like Uber and Lyft. Ten cents from that fee will go toward local transportation infrastructure in cities and towns, 5 cents will go toward the state's Department of Public Utilities and 5 cents will support Massachusetts' taxis.
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The tax, part of comprehensive transportation legislation passed in early August, is likely the first of its kind. It amounts to a subsidy for the struggling taxi industry provided by the massively successful ride-hailing industry.
Uber and Lyft will have to pay the tax directly, without passing on the fee to riders or drivers.
“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. "We look forward to working with the administration to implement the law to ensure it increases transportation options and economic growth.”
Uber operates throughout Massachusetts, covering the greater Boston area as well as significant portions of western Massachusetts.
The statewide law — and its locally allotted funds — takes some pressure off of local jurisdictions to independently regulate Uber's growing presence.
The fees are temporary. The taxi subsidy is in place for five years, and the entire tax is in place for 10.
It hasn't yet been determined exactly how the taxi industry will spend its portion of the tax income. All the law specifies is that the money from the fee will "provide financial assistance to small businesses operating in the taxicab, livery or hackney industries to encourage the adoption of new technologies and advanced service, safety and operational capabilities and support workforce development."
The legislation is framed as in support of "innovative transportation options" in Massachusetts.
“I am pleased to sign bipartisan legislation to ensure Massachusetts remains a leader for innovative new technologies, with safe and diverse transportation options and opportunities for hardworking individuals to earn a living," Governor Charlie Baker said in a statement. “This regulatory framework includes many of our own proposals to embrace disruptive technology and prioritize public safety to give consumers safe and reliable travel choices.”