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Massachusetts Sets First-of-Its-Kind Tax on Uber, Lyft

The Bay State will redirect ride sharing money toward infrastructure and taxis.

Massachusetts is the first state to tax ride sharing.

The move, coming after Gov. Charlie Baker signed H.4570 into law this month, introduces a nationally unique package of regulations for Uber, Lyft and others in the growing industry. The state will take 20 cents per ride — which the companies can’t add onto customers’ rates — and redistribute it among local governments, the state’s transportation fund and the taxi industry.

Adrian Durbin, a spokesperson for Lyft, confirmed with Government Technology's FutureStructure that this is the first such state fee the company is aware of.

The money will largely go to fund transportation infrastructure, and each local government’s share of the money will be based on how many rides originate within its borders. The last part — 5 cents per ride going to the taxi industry, which acts as a competitor to ride sharing — will only last until 2022.

On top of that, the bill introduces what Baker’s office referred to as the “strongest state background check system in the nation” for ride share drivers. That’s been a controversial piece of the state regulation conversation as governments have grappled with the many unforeseen issues related to the “gig economy” business model. In Massachusetts, the answer comes in the form of requiring companies like Uber to check whether a potential driver has been convicted of any sexual offenses, robbery or fraud, and hasn’t had more than four traffic violations in the past three years — among other things.

The legislation sweetened the pot for ride sharing companies, though, as it gives them the ability to send drivers to Boston Logan International Airportand the Boston Convention and Exhibition Center. Logan International Airport is the 18th-busiest airport in the U.S., according to Airports Council International, serving more than 33 million passengers in 2015.

Nestled into the bill are some other technologically minded caveats. The state will set up a task force to examine, among other issues, the impact that automated vehicles might have on the “ride for hire” industry, the feasibility of creating incentives for alternative fuel vehicles in ride sharing, and the possibility of linking ride sharing apps with emergency response agencies.

“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,” Baker said in a statement.

Ben Miller is the associate editor of data and business for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.
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