In New York City, many residents choose to forego owning a vehicle for personal use and instead turn to for-hire vehicles for their transportation needs. These services, such as Uber, Lyft, and taxis, offer passengers the convenience of summoning a ride by the touch of a smartphone application or a telephone call, the comfort of being driven to your destination, and they take away the inconvenience of finding parking. New York legislators see the value in taxing this popular method of transportation not only to bring in revenue to improve public transportation services, but also to cut down on the amount of heavy traffic in the city.
New York state requires transportation network companies (TNCs) and taxis to collect and remit several taxes to the state, and the passage of S.B. S7509C will add a new congestion surcharge effective Jan. 1, 2019.
The following is an overview of the taxes that may affect your next ride in a New York for-hire vehicle.
Currently, the tax on medallion taxicab trips is imposed on taxicabs and hail vehicles (for-hire vehicles with a street hail livery license issued by New York City’s Taxi Limousine Commission) at $0.50 per trip in the metropolitan commuter transportation district (MCTD), which encompasses New York City (Manhattan, Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island)) and the counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester, for any trip that either begins and ends in New York City or that begins in the city and ends in a MCTD county.
A state assessment fee is imposed on every prearranged trip provided by a TNC that begins anywhere in New York state outside New York City and ends anywhere in the state. The TNC assessment fee is 4 percent of the gross trip fare, which means the sum of the base fare charge, distance charge, and time charge for a complete TNC prearranged trip at the applicable rate charged by the TNC at the time of the trip.
Beginning in 2019, the congestion surcharge will be imposed for each trip that begins, ends, or enters the congestion zone by a for-hire vehicle or for each person transported in a pool vehicle such as UberPool and Via. For the purposes of the surcharge, the congestion zone is the area of New York City, in the borough of Manhattan, south of and excluding 96th street. The surcharge is imposed at the rate of $2.75 for each trip by a for-hire vehicle and $2.50 for each trip by a taxicab where the trip:
The congestion surcharge will apply to taxicabs subject to the tax on medallion taxicab trips in the MCTD, but hail vehicles subject to the tax on medallion taxicab trips will not be subject to the surcharge.
For transportation by a pool vehicle, the surcharge is imposed at the rate of $0.75 per each person that both enters and exits the vehicle in New York, and who is picked up in, dropped off in, or travels through the congestion zone.
A congestion surcharge is not a new idea in New York. In 2008, former Mayor Michael Bloomberg’s plan for an $8 traffic fee for drivers entering a congestion zone was defeated due to a strong opposition, and while many state legislators still oppose the new surcharge, it’s expected to generate approximately $400 million in additional revenue for the metropolitan transit authority. (Bloomberg is founder and majority owner of Bloomberg News parent Bloomberg LP. Bloomberg BNA is an affiliate of Bloomberg LP.) For now New York legislators will surely continue to debate the merits of congestion pricing and find additional ways to fund all their transit infrastructure needs.
Stay up to date with Bloomberg Tax coverage for updates and legislative bills relating to transportation taxes.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Would congestion zone taxes help ease traffic in major U.S. cities?
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