Baltimore has collected no taxes on an estimated 9 million Uber and Lyft rides per year despite a 2015 state law enabling it to do so, costing the city roughly $2.1 million in revenue annually, according to the city Department of Finance.
Revenues from the city’s parking tax, meters and city-owned garages, meanwhile, have plunged a collective $4.1 million, or about 6%, in the past two years, according to the finance department, which called the growth of rideshare “one of the factors explaining the recent sharp decline.”
“The shift to [rideshare] has reduced income in traditional parking-related sources, but still puts pressure on the City’s aging transit infrastructure," the department wrote in a fiscal analysis last year.
Uber and Lyft pay a 25-cent tax on each ride originating in Annapolis, Brunswick, Frederick, Montgomery County, Prince George’s County and Ocean City due to local laws in those municipalities.
Uber, which charged Baltimore riders 25 cents extra for nearly a year in anticipation of having to pay a similar tax, instead began crediting them with Uber Cash in recent weeks for a “city-specific fee” that was “ultimately not collected by the city.”
“You were charged a city-specific fee for a trip or trips you took in Baltimore, MD between October 2018 and August 2019,” the company said in emails to riders. “Because these fees ultimately were not collected by the city, we’ve credited you the amount charged ... in Uber Cash to use on future rides or Uber Eats.”
Lyft did not collect such a fee from its riders in Baltimore because there was no law for a per-ride fee, a Lyft spokeswoman said.
Despite pressure from City Councilman Ryan Dorsey, the administration of then-Mayor Catherine E. Pugh did not introduce a bill that would have allowed the city to begin taxing Uber and Lyft ride until January 2019. It then languished without a hearing for the past year in the council’s Taxation, Finance and Economic Development committee. It is set to be heard by the committee at 10 a.m. Thursday.
The yearlong delay before the bill received a hearing was a result of Pugh’s resignation amid a scandal over her self-published children’s book series and the political upheaval that ensued, city officials said.
Then-Council President Bernard C. “Jack” Young took over as ex-officio mayor upon Pugh’s leave of absence in April, elevating Councilwoman Sharon Green Middleton, the council’s vice president and the finance committee chair, to acting council president. But when Pugh resigned in May, and Young was sworn in as permanent mayor, Councilman Brandon Scott was elected by his colleagues to the council presidency.
A finance committee hearing on the bill, initially set for October, was rescheduled to allow Scott to be briefed by the finance department, Middleton said.
“The main holdup was just the briefing,” Middleton said. “I don’t see any other problems with it.”
The city is aware that Uber collected the 25-cent fee from Baltimore riders, and the law department will attempt to recoup it, despite no law being in place, said Lester Davis, a spokesman for Young.
“The city’s entitled to the fee," Davis said. “The lawyers are going to figure out the next steps.”
Young believes the rideshare tax bill has the support needed to pass the City Council and plans to sign it "as soon as it crosses his desk,” Davis said.
Dorsey, a Democrat who represents Northeast Baltimore, said he learned in March 2018 that the companies were paying no tax to the city after inquiring about whether the revenue could be dedicated to bicycle infrastructure.
Dorsey said he wanted to make the issue public, but decided instead to handle it “as amicably as I could,” quietly asking Pugh’s finance department to move forward with whatever needed to be done to collect the fee. He said the city finance and law departments met for months to “suss out what needed to be changed in the [city’s taxi] law and exactly why.”
“A lot of people at that time were saying that I needed to be more easygoing, not throw bombs," Dorsey said. “I should’ve publicly created awareness. It would’ve gotten done a lot faster.”
Taxing rideshare in Baltimore has been the better part of a decade in the making. When Uber and Lyft launched in the city in 2013, officials passed a 25-cent “taxi tax,” the only one of its kind in the state at the time, for any trip originating or ending in the city, but the law initially did not include rideshare.
The state passed a law, sponsored by now-Maryland Senate President Bill Ferguson, enabling such taxes to include the rideshare companies, too, beginning in January 2015. Baltimore was exempted from a 25-cent cap on the tax, “and is therefore authorized to set its own rate,” according to the finance department.
Ferguson amended the state law the following year, limiting its scope in three ways and taking the city’s law out of compliance:
- Taxes could only be levied by the trip, not also by the number of passengers in a vehicle.
- Rides could only be taxed by the jurisdiction where they originated, and not also by where they ended.
- The state comptroller’s office — not the city finance department — would collect rideshare tax and remit the money to the city, but any taxes on taxis still would be collected by the city.
“The Senate President believes that the City should be collecting taxes from ridesharing companies Uber & Lyft, and is disappointed to hear that they’re not being collected," said Jake Weissmann, a spokesman for Ferguson, in a statement.
Lyft gave multiple political contributions to both Ferguson and Pugh during the process, according to campaign finance records. The company gave a combined $2,000 to Pugh’s campaign committee in a pair of donations in April and October 2016. It gave $1,000 to Ferguson in October 2015, and another combined $1,000 to his campaign committee in 2017 and 2018.
The company’s other political contributions in Maryland include a $5,000 donation to the Hogan-Rutherford Inaugural Committee in January 2019. Uber also donated $10,000 to the Republican governor’s inaugural committee that month.
“Lyft — like many companies and industries — supports a variety of causes, organizations, and individuals that share our goal of providing affordable and reliable transportation,” Lyft spokeswoman Campbell Matthews said in a statement.
While Uber and Lyft do not release data on the number of rides in each market, Baltimore’s finance department estimated they give about 14.6 rides per capita, based on data for similarly sized King County, Washington, which includes Seattle. The nearly 9 million rides per year equal about $2.1 million in annual rideshare tax revenue, given a 25-cent per ride tax.
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The finance department also recommended doubling that tax rate to 50 cents to generate $4.2 million per year.
“Given the sharp decline in [parking] revenues, we believe an additional rate increase is warranted,” the department wrote in the fiscal analysis of the bill.
Nick Verderamo was surprised last week by the email from Uber, saying his account had been credited $4.25 in Uber Cash for future rides or Uber Eats, the company’s food-delivery service.
The 29-year-old Transamerica actuary, who lives in Canton, said he took about 30 or 40 Uber rides in 2019, using the ride-share service “a few times a month.”
“I honestly have no idea” why the money had been credited to his account, Verderamo said.
Upon seeing that the fee had not been collected, he said, his first thought was “city incompetence.”
“How poorly run is our city?” he said. “I don’t know if it’s a city issue or not, but to be honest, that was my initial thought.”