Many city taxi riders will see the cost of their trips increase by 25 cents starting next week, as the Maryland Public Service Commission has approved a plan by taxi companies to pass a new city tax on to their customers.
Mayor Stephanie Rawlings-Blake's administration previously said the intent of the new tax law was for the service providers to carry the extra cost, not customers. But the PSC, not the city, sets rules for how taxis can structure their rates in the state.
The rate increase, which the PSC approved Tuesday, allows all Baltimore and Baltimore County cab companies to post temporary stickers alerting travelers to the increase while broader rate negotiations continue.
Dwight Kines, a spokesman for Veolia Transportation, which operates the Yellow, Checker and Sun cab fleets in the city, said with those stickers in place, the company "will start collecting the tax from our customers next week and pay the city."
Passing the tax on makes it "not so cumbersome on us and at the same time tries to get the city the revenue they're looking for," Kines said.
It also may provide a solution to a standoff over the excise tax that has been brewing for months.
The tax passed last summer as part of Rawlings-Blake's 10-year financial plan for the city, meant to generate an estimated $1.3 million in annual revenue for the city by charging taxi, limousine and for-hire sedan services 25 cents per passenger they transport into, out of or within the city limits.
The revenue will be used to improve schools, reduce blight and offset cuts to city property taxes, according to the mayor's office.
However, many taxi and other for-hire transportation companies balked at the new charges and told the city they needed more time to prepare for the change. They also said they would need to pass the charge on to their customers.
Earlier this month, Councilwoman Mary Pat Clarke introduced a bill to delay implementation of the tax by six months while solutions to companies' concerns were addressed, but the bill is still tied up in the legislative process.
Meanwhile, by Tuesday, the due date for October taxes, the city had only collected $3,022.75 under the new tax from 64 companies, according to Kevin Harris, a Rawlings-Blake spokesman.
One company, New Star Car Service in Dundalk, was responsible for more than $2,000 of that total, with many other companies submitting payments of less than $5.
At a rate of 25 cents per passenger, that revenue equates to taxes paid on more than 12,000 riders transported in the city. But it also falls well below predictions by the city finance department that the tax would bring in $1.3 million in annual revenue, or more than $100,000 a month if spread evenly throughout the year.
Harris said negotiations over the tax have been continuing, with the mayor offering companies multiple options for how the taxes might be levied under a "grace period," waiving fees or penalties as they work out kinks.
Were Clarke's bill to delay the tax to pass the council, Harris said, Rawlings-Blake would veto it.
In a statement Wednesday, Harris said the PSC's decision would be "a positive development" if it helps companies pay the tax.
"Our intention was to try and mitigate costs being passed on to consumers, but if this is something that the industry feels is necessary to help them be compliant with the tax, then we respect that," he said.
Kines, with Veolia, said paying for October and November remains a problem for his company, which wasn't able to increase its rates before the PSC decision. Kines also said he still thinks the city needs to restructure the tax law so that it's easier to hold drivers accountable for collections.
But with Veolia starting to collect the tax next week, December revenue is likely to be more in line with city revenue predictions. Veolia fleets account for about 550 taxis in the city — or about half of Baltimore's total.