A major municipality has finally challenged Uber’s impunity to operate what is a taxi service without proper licensing, an issue we addressed in a previous ValueWalk article.
Brussels says “nicht” to transportation firm ferrying passengers without paying tax
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?
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Uber defied local political muscle… somehow
But it wasn’t the political muscle in Chicago or New York that stood up to Uber. It was a Brussels court, those softie socialists, who made the absurdly bold decision to rule that a taxi service must have a taxi license to operate in a municipal region.
“We have absolutely nothing against an application like Uber. On the contrary, we would even want to integrate them into the traditional taxi sector,” said Brussels’ Minister of Public Works Brigitte Grouwels in a statement from a spokesman on Tuesday. “However, if you offer paid transport services you should abide by the rules of the sector, otherwise there is unfair competition,” he said. In short: Uber should pay taxes like everyone else and its drivers should have proper licensing and insurance when in operation as a transportation service. Wow, that’s a brave ruling.
The genesis of the Brussels revolt occurred when a taxi company noticed Uber was undercutting taxis by nearly 20%. The cost of a taxi medallion and various fees and licensing typically exceeds 20% for standard taxi drivers. The benefit Uber had in official government officials allowing the transportation company to operate without licensing found its way back into the consumer’s pocket, if through a less than egalitarian method.