Do the Uber protests snarling traffic in London and blocking an airport in Paris really expose a two –tiered tax regime?
The primary service Uber provides is simple. Automotive transport is used to ferry passengers to their destination for money. While that describes a taxi and limousine service, the key difference is that Uber doesn’t pay livery taxes and fees. This is the core of the dispute that is taking an organized turn towards revolt against unfair tax treatment.
Shy does the government provide Uber a favorable tax treatment?
So why does the government provide Uber a favorable tax treatment compared to the taxi drivers? Could it be the Internet is involved? The involvement of technology as a method to skirt regulatory principles might also be seen in the debate over high frequency trading and access to market moving information before the general public. Because technology is a factor the rules change, which also might explain other services such as the popular Air BnB. The Uber controversy isn’t much different in some respects from the Air BnB spat, where people open their homes to serve as a hotel but don’t pay hotel taxes.
The Uber issue is really about tax avoidance, a topic of debate in some cities. In London a unique license can cost upwards of €200,000, a Bloomberg report said. Why does Uber get to avoid taxes and fees paid by similar transportation companies? ValueWalk noted the tax issue in a report April 15 noting how Brussels challenged Uber’s impunity to operate what is a taxi service without proper licensing.
Uber operating without taxi licensing
The issue of Uber operating without taxi licensing in major metropolitan areas crosses the lucrative operation of highly connected taxi medallion owners. In Chicago for instance, the taxi medallions are owned by a small group of politically connected operatives who were never shy to flex their political muscle to defend their monopoly – crushing those who advocated free markets. Then comes Uber, the apparently highly connected firm, backed by Goldman Sachs, who steps on the toes of local fiefdoms with an immunity the reminds one of Obi-Wan Kenobi in Star Wars hypnotizing local officials to not ask logical questions. Among those logical questions: how can a company operate a taxi service without a taxi medallion or paying fees?
Other municipalities could wake up and realize the money they are losing by not taxing Uber could be tremendous. Which is part of the protestors aim. Uber is an “American monster that has no qualms about breaching any and all laws in the pursuit of profit, most of which will never see a penny of tax paid in the U.K.,” said Steve McNamara, the London Licensed Taxi Drivers Association’s (LTDA) general secretary.
It’s not clear if the message about Uber skirting taxes is getting through, but the ruckus over Uber has driven interest in the service through the roof. In other words, news reports prompted by the taxi cabs has helped Uber grow even more.