5 ms·

The deck is stacked against Uber, Lyft and Sidecar. You have to realize that the taxi industry is a government-cab collaboration, with the customer getting flee

by ajays 14y ago

The deck is stacked against Uber, Lyft and Sidecar. You have to realize that the taxi industry is a government-cab collaboration, with the customer getting fleeced. It is not as simple as "government grants license to cab operator, cab operator runs his cab and makes money". No. The government takes a cut from the daily action too. Use a credit card in the cab? The government takes a cut. Want to rent your medallion to someone else? The government takes a cut. Right now, the financial impact of these outfits is minimal. But when they seriously start impacting government revenues, expect the lawmakers to come out swinging. They'll tag-team with the taxi union(s) and make life hell for the Sidecars, Ubers and Lyfts of the world.

firefoxman1 14y ago
I wonder if Uber, Lyft and Sidecar aren't competing against each other right now, seeing as they have a common enemy. It would be wise to have all the people on your side as possible even if they won't be in the future.
- Robelius 14y ago
  As far as I know they are not competitive with each other. They are small enough that they don't effect one another.
callmeed 14y ago
I've always thought AirBnB has as big a deck stacked against it (or bigger). There are a lot of cities whose main industry is tourism and collect 10%+ bed taxes. I can't imagine they'll give those up easily.
- yardie 14y ago
  I don't think so. The VRBO market has existed for years (decades even) AirBnB just made it marketable and easy to enter. The controversy with them is some of the property owners are really taking the piss and treating their residential property as hotels and not paying the hotel taxes (BTW, Florida is 20%). All the reports I've read have been spot on (though the AirBnB founders disagree). The hotels are paying this tax. Some of your members properties look awfully like a hotel. You collect the money, you collect the tax. Unlike the taxi companies who actually have a monopoly, the hoteliers just want the same deal to apply to everyone.
  - Zak 14y ago
    It might be reasonable in this case to ask why the hotels have to pay a special tax. Why shouldn't they just collect sales tax like every other business?
    - rprasad 14y ago
      Because renting out a hotel room is not a sale. Ergo, a sales tax does not apply. An occupancy tax is the tax levied on short-term leases (i.e.,, hotels).
      - ajays 14y ago
        It's mainly because (a) sales taxes are much less than these occupancy taxes, and (b) socking it to the visitor has no political repercussions; they're not going to vote in the elections anyways.
      - Zak 14y ago
        There's sales tax on renting a car most places - why not a room? Why should there be a different tax at a different rate for renting a room?
    - yardie 14y ago
      Because visitors don't pay taxes or elect politicians. So when the cities need to balance their budget and vote on a new revenue stream guess where it's coming from? Property and sales tax increases are widely unpopular so politicians look for revenue that won't impact their career: cigarettes, liquor, gambling, and hotels.
- jeandenis 14y ago
  Couldn't those cities move to tax the vacation rental industry, though? In developed markets like Paris, a majority vacation rentals are done through agencies (who manage cleanings, checkins checkouts, quality control, etc.). It would be fairly straightforward for the cities to pass laws to force agencies to get licenses and pay a tourism tax, much like hotels do. Most vacation rental agencies I've dealt with wish they were taxed as opposed to being de jure illegal but de facto tolerated. That uncertainty has made acquiring new properties and investing capital in the business quite risky. That's not to say that the deck isn't somewhat stacked against vacation rentals. There is a hotel lobbie that's dead-set to kill the industry. Unlike the agencies, the hotel people are quite organized (although that's changing in my experience). And there's an even greater threat from the fact that most vacation-rental properties are owned by foreigners who are seen as driving the price up of longer-term rentals because of the new emphasis on the short-term market. I do think that rising rental prices in many urban centers is the biggest short-term danger -- PR and real. At the same time, vacation rentals are becoming more and more necessary to tourism in big cities. E.g., Paris has more than 75+k apartments rented by the week, with occupation rates above 50%. If you made it illegal, there wouldn't be nearly enough hotels to cover those millions of travelers. And enforcing a ban on a per-property basis would be extremely expensive in terms of man-power. My prognosis is that the market matures, the cities find a way to benefit through taxation, vacation rentals become a bit less price-competitive versus hotels because of that taxation, and it grows from an $80b a year market to a $200b a year market [see http://software.homeaway.com/Media/Files/pdf/RezFest2012-BrentBellm.pdf http://software.homeaway.com/Media/Files/pdf/RezFest2012-Bre...]. I know next to nothing about Uber and that business, and I am sure the taxi lobby will do its best to kill it, but in the end one should never underestimate gov't ability to be clever when it comes to finding new revenue through taxation, especially during these times. [I have invested in a couple of companies in Europe in the vacation rental market]
stevewilhelm 14y ago
So cities, counties, and states are supposed to build and maintain roads, keep them safe, and allow businesses like Uber that use these roads and services to do so without paying for them? How is that sustainable?
- ajays 14y ago
  Do UPS, FedEx, etc. pay separately for the privilege to use these roads? No. The money to pay for these facilities comes from gas taxes (mostly), sales taxes, income taxes, etc., all of which are paid by the Uber/Lyft/Sidecar people too. Their cars don't run on air, you know. In fact, Uber's limos use much more gas than the Priuses that the cabs drive, so in fact at least Uber people are paying more for the use of these roads.
- deleted 14y ago
  [deleted]
- Zak 14y ago
  Uber's drivers pay tax on the fuel they use and there's sales tax on the transaction itself. They are, in fact paying for the use of the roads. Why should there be a special additional tax on that particular type of business?
  - glomph 14y ago
    Because everyone else in the business is still paying a special additional tax? If you disagree with that, you have to fight to change it for everyone. You don't just start competing without paying the same taxes as everyone else.
    - Zak 14y ago
      At first, that sounds more fair, but in practice it means a lot fewer people would start doing useful things.
    - danielweber 14y ago
      Earnest question: have any of Lyft et al tried to just say "okay, we'll pay the tax, give us the form to fill out"?
Robelius 14y ago
I was following this story for about a week now. SF was extremely conflicted because they want to be tech friendly, but at the same time taxis are a huge moneymaker. There are also unanswered questions about safety and liability in case of car accidents. If the city did want more taxi cabs though, they would allow more. There are many cab companies waiting for the chance to expand. Also, the article doesn't say it (I only skimmed it though so I may of missed it), but the tech companies were issues warnings to cease their actions. I can't find a source to back it up though. Only heard it on NPR while driving.
penrod 14y ago
The problem with this argument is that anti-competitive regulations that restrict the size of the taxi market probably do not maximize government revenues. The government would probably receive greater revenues if it deregulated the market since more people would take cabs, albeit at somewhat lower fares. The more significant dynamic behind regulatory capture is the simple fact that the groups who are most interested in taxi regulations and the membership of CPUC, and who are most incentivized to lobby for advantageous laws and to try and get friendly people on the Commission, are the very taxi firms being regulated.

by ajays 14y ago

firefoxman1 14y ago

I wonder if Uber, Lyft and Sidecar aren't competing against each other right now, seeing as they have a common enemy. It would be wise to have all the people on your side as possible even if they won't be in the future.

Robelius 14y ago
As far as I know they are not competitive with each other. They are small enough that they don't effect one another.

callmeed 14y ago

I've always thought AirBnB has as big a deck stacked against it (or bigger). There are a lot of cities whose main industry is tourism and collect 10%+ bed taxes. I can't imagine they'll give those up easily.

yardie 14y ago
I don't think so. The VRBO market has existed for years (decades even) AirBnB just made it marketable and easy to enter. The controversy with them is some of the property owners are really taking the piss and treating their residential property as hotels and not paying the hotel taxes (BTW, Florida is 20%). All the reports I've read have been spot on (though the AirBnB founders disagree). The hotels are paying this tax. Some of your members properties look awfully like a hotel. You collect the money, you collect the tax. Unlike the taxi companies who actually have a monopoly, the hoteliers just want the same deal to apply to everyone.
- Zak 14y ago
  It might be reasonable in this case to ask why the hotels have to pay a special tax. Why shouldn't they just collect sales tax like every other business?
  - rprasad 14y ago
    Because renting out a hotel room is not a sale. Ergo, a sales tax does not apply. An occupancy tax is the tax levied on short-term leases (i.e.,, hotels).
    - ajays 14y ago
      It's mainly because (a) sales taxes are much less than these occupancy taxes, and (b) socking it to the visitor has no political repercussions; they're not going to vote in the elections anyways.
    - Zak 14y ago
      There's sales tax on renting a car most places - why not a room? Why should there be a different tax at a different rate for renting a room?
  - yardie 14y ago
    Because visitors don't pay taxes or elect politicians. So when the cities need to balance their budget and vote on a new revenue stream guess where it's coming from? Property and sales tax increases are widely unpopular so politicians look for revenue that won't impact their career: cigarettes, liquor, gambling, and hotels.
jeandenis 14y ago
Couldn't those cities move to tax the vacation rental industry, though? In developed markets like Paris, a majority vacation rentals are done through agencies (who manage cleanings, checkins checkouts, quality control, etc.). It would be fairly straightforward for the cities to pass laws to force agencies to get licenses and pay a tourism tax, much like hotels do. Most vacation rental agencies I've dealt with wish they were taxed as opposed to being de jure illegal but de facto tolerated. That uncertainty has made acquiring new properties and investing capital in the business quite risky. That's not to say that the deck isn't somewhat stacked against vacation rentals. There is a hotel lobbie that's dead-set to kill the industry. Unlike the agencies, the hotel people are quite organized (although that's changing in my experience). And there's an even greater threat from the fact that most vacation-rental properties are owned by foreigners who are seen as driving the price up of longer-term rentals because of the new emphasis on the short-term market. I do think that rising rental prices in many urban centers is the biggest short-term danger -- PR and real. At the same time, vacation rentals are becoming more and more necessary to tourism in big cities. E.g., Paris has more than 75+k apartments rented by the week, with occupation rates above 50%. If you made it illegal, there wouldn't be nearly enough hotels to cover those millions of travelers. And enforcing a ban on a per-property basis would be extremely expensive in terms of man-power. My prognosis is that the market matures, the cities find a way to benefit through taxation, vacation rentals become a bit less price-competitive versus hotels because of that taxation, and it grows from an $80b a year market to a $200b a year market [see http://software.homeaway.com/Media/Files/pdf/RezFest2012-BrentBellm.pdf http://software.homeaway.com/Media/Files/pdf/RezFest2012-Bre...]. I know next to nothing about Uber and that business, and I am sure the taxi lobby will do its best to kill it, but in the end one should never underestimate gov't ability to be clever when it comes to finding new revenue through taxation, especially during these times. [I have invested in a couple of companies in Europe in the vacation rental market]

stevewilhelm 14y ago

So cities, counties, and states are supposed to build and maintain roads, keep them safe, and allow businesses like Uber that use these roads and services to do so without paying for them? How is that sustainable?

ajays 14y ago
Do UPS, FedEx, etc. pay separately for the privilege to use these roads? No. The money to pay for these facilities comes from gas taxes (mostly), sales taxes, income taxes, etc., all of which are paid by the Uber/Lyft/Sidecar people too. Their cars don't run on air, you know. In fact, Uber's limos use much more gas than the Priuses that the cabs drive, so in fact at least Uber people are paying more for the use of these roads.
deleted 14y ago
[deleted]
Zak 14y ago
Uber's drivers pay tax on the fuel they use and there's sales tax on the transaction itself. They are, in fact paying for the use of the roads. Why should there be a special additional tax on that particular type of business?
- glomph 14y ago
  Because everyone else in the business is still paying a special additional tax? If you disagree with that, you have to fight to change it for everyone. You don't just start competing without paying the same taxes as everyone else.
  - Zak 14y ago
    At first, that sounds more fair, but in practice it means a lot fewer people would start doing useful things.
  - danielweber 14y ago
    Earnest question: have any of Lyft et al tried to just say "okay, we'll pay the tax, give us the form to fill out"?

Robelius 14y ago

I was following this story for about a week now. SF was extremely conflicted because they want to be tech friendly, but at the same time taxis are a huge moneymaker. There are also unanswered questions about safety and liability in case of car accidents. If the city did want more taxi cabs though, they would allow more. There are many cab companies waiting for the chance to expand. Also, the article doesn't say it (I only skimmed it though so I may of missed it), but the tech companies were issues warnings to cease their actions. I can't find a source to back it up though. Only heard it on NPR while driving.

penrod 14y ago

The problem with this argument is that anti-competitive regulations that restrict the size of the taxi market probably do not maximize government revenues. The government would probably receive greater revenues if it deregulated the market since more people would take cabs, albeit at somewhat lower fares. The more significant dynamic behind regulatory capture is the simple fact that the groups who are most interested in taxi regulations and the membership of CPUC, and who are most incentivized to lobby for advantageous laws and to try and get friendly people on the Commission, are the very taxi firms being regulated.