Washington, D.C., just passed a steep tax hike on ridesharing services to pay for its increasingly unpopular, frequently on-fire Metro system.
On Tuesday the D.C. City Council boosted the city's tax on trips performed by services like Uber, Lyft, and Via from the current 1 percent tax to a full 6 percent, adding 50 cents to a $10 ride.
D.C. Mayor Muriel Bowser had proposed a more modest 4.75 percent tax on ridesharing trips back in March. City Councilman Jack Evans—who also chairs Metro's board (which operates independently of the city government)—sold his colleagues on a higher tax by promising that riders wouldn't even notice it.
"No one will notice that. No passengers will know because they have no idea what they are going to pay anyway," said Evans in April. (Evans had previously described the prospect of taxing Uber as "very exciting.")
The money raised from the tax will go towards fixing up the city's ailing Metro system, which has seen ridership crater in the wake of deteriorating service levels and a series of safety scandals.
Weekday ridership on the Metro rail system averaged 598,000 for Fiscal Year 2018. That's below the 612,000 weekday trips it was averaging in May 2017, which is lower still than the 639,000 trips it averaged in May 2016, just before Metro began a series of repairs that saw stations shut downs for months at a time. Currently the system services the same number of people it did in 2000, back when the D.C. metro-area had about 1.5 million fewer residents.
Despite the repairs, maintenance issues continue to plague the system. Track fires continue unabated, as do months-long station shutdowns. Metro has had its fair share of recent scandals too.
In April it was revealed that 1,700 concrete panels installed on the system's under-construction Silver Line were defective. In May, a report from Metro's inspector general found that inspectors at its Rhode Island Avenue station had copied text verbatim from previous years' structural integrity inspections into their reports and failed to inspect hard-to-reach portions of the station. (The Rhode Island stop is being closed for over a month for repairs this summer.)
Frustrated with this state of affairs, former Metro riders have increasingly opted for ride sharing services like Uber and Lyft. Tuesday's tax hike—which was part of the city's 2019 budget—is an attempt to recapture some of the dollars fleeing along with these riders.
Ride-sharing companies had lobbied for a lower tax that excluded trips taken on their carpooling services. Tuesday's vote has left them a bit miffed.
"While we're disappointed that City Council voted to increase taxes across the board without providing measures to incentivize the use of shared rides, Lyft remains focused on providing the best transportation experience possible," said a Lyft spokesperson in a statement.
In essence D.C. has opted to tax the transportation services people actually use in an attempt to shore up one that people don't. Given that Metro has done such a poor job improving its service with past infusions of cash, it's unlikely that this will be what sends riders back into the system. Instead they will simply shell out more for Ubers that will get them to their destinations on-time and unscathed.