Uber Should Pay an MTA Fee Like Yellow Cabs, But the Fee Should Be Smarter

One of the points of debate over Uber’s operations in New York is whether its trips should contribute the same 50-cent surcharge to the MTA that yellow and green taxis do. It’s an easy question to answer in some ways: It doesn’t matter whether a car is yellow, green, or black — if some for-hire vehicles have to pay an MTA fee, they all should. But as long as this taxi surcharge is in the public eye, there’s also an opportunity to rethink the fee itself and make it smarter.

It shouldn't matter what color your taxi is -- but it should matter where the trip goes. Photo: Shuggy/Flickr
It shouldn’t matter what color your taxi is — but it should matter where the trip goes. Photo: Shuggy/Flickr

Ideally, the surcharge paid by yellow taxis, Uber, and other for-hire services would be higher in the congested Manhattan core than in outer-borough neighborhoods lacking decent transit service. While that wouldn’t be a substitute for real congestion pricing of all motor vehicle trips, it could set a precedent and demonstrate the impact of congestion-based fees on a substantial portion of Manhattan traffic.

Here’s the way things are set up today: A 50-cent surcharge on all green and yellow taxi trips will generate an estimated $87 million for the MTA this year, according to the Citizens Budget Commission. Black cars, including Uber and Lyft, are subject to a sales tax that isn’t paid by metered taxis. A sliver of that — slightly more than one-third of one percent — will generate an estimated $7 million for the MTA this year.

Because of this imbalance, Uber’s growth is poised to eat into MTA funding. CBC projects the MTA will actually lose revenue as Uber trips grow and taxi trips continue to decline.

Mayor Bill de Blasio spoke about the problem on WNYC’s Brian Lehrer Show last week. “We also have to support the MTA, which is in the interest of all of us, and that happens right now through a certain number of taxis, but it doesn’t happen through Uber, for example,” he said.

The fee could also be restructured in a way that addresses problems beyond the MTA’s coffers.

As Uber and competitors reshape the industry, the number of for-hire cars is growing. New York now has 8.5 taxis, liveries and black cars per 1,000 residents, up from 6.2 in 2011, according to CBC. Most of those vehicles concentrate in the Manhattan core, contributing to car congestion in the most traffic-choked parts of the city.

In the wake of his bruising battle with Uber, de Blasio said the city is developing a “new deal” that will “rationalize the whole picture” of taxi and for-hire vehicle regulation. “There are real challenges that are not being addressed: congestion issues, pollution issues, revenue issues,” the mayor said.

The city sorely needs a total reset of its taxi and livery regulations. A smart approach to the MTA fee should be part of that.

There should be an even playing field between the different types of for-hire vehicles, but applying the 50-cent MTA fee to all trips is a blunt tool that simply raises costs for people who are getting around without using a private car.

Some of those people have no decent subway or bus options for their for-hire trips, but an Uber ride from Midtown to Wall Street has plenty of transit alternatives. These types of trips should be paying much more than 50 cents into the MTA’s coffers.

It wouldn’t be too hard to charge extra for car trips in the Manhattan central business district. The Taxi and Limousine Commission tracks where taxi and black car trips originate, and it also knows where taxi trips end. Trips starting or ending in the Manhattan core — a huge chunk of for-hire journeys — could be subject to a higher MTA fee, while outer-borough trips would get a break.

It’s like a smaller-scale version of congestion pricing or the Move NY toll plan, applied only to for-hire trips. Of course, this would be no substitute for a complete toll reform plan, which would have much greater power to cut traffic and raise revenue for transit. But it could be a stepping stone toward that.

The city has the power to set taxi rates, but a surcharge requires state action, just as it did when the 50-cent fee was created in 2009. So any changes to the taxi fee would require sign-off from Albany — and Governor Andrew Cuomo. That will be the case if the city tries simply to extend the current charge to all for-hire trips, or if it goes for a smarter way to structure the fee.

  • Bobberooni

    I don’t understand why it seems to be so politically difficult to level the playing field for all for-hire vehicles:

    * Drivers should pass the same licensing, and vetting requirements.
    * Taxes and surcharges should be the same.
    * Any quantity limits should apply to all equally. I agree, setting market-based surcharges to limit congestion is a better approach than the (now-brown) direct approach of limiting medallions.
    * Any minimum wage or employment laws should apply the same.

    Beyond that… my guess is that a large part of Uber’s popularity is its ride-hailing app, which people find more convenient than standing on a street corner in the rain, raising their arm. The yellow cabs would be well advised to offer something similar, and pronto!

  • Alex 3speed

    I had to read this really quickly and think it’s a good idea. I’m curious about a few things.
    Who pays the sliding fee? If it’s the user it will not favor outer boroughs as far as the driver is concerned. Fares will be higher and they will continue to make CBD centric trips for much higher percentage tips. If we see a decline in users of cab service, cab and FHV drivers will need to coast more for fares. And without a cap or reduction of cabs, there will be ever increasing numbers.
    What I want to know is whether yellow cab hails are decreasing because of replacement/encroachment of market by black cars, or because they can’t get to customers because of the congestion. I think FHV’s role in replacement is overstated, their role in congestion is understated, but that a study will show that BOTH continue to grow.

  • Someone

    I’d suggest a fee structure where Uber drivers are charged by the mile for when they have the app active (whether or not there’s a passenger in the car). That would accurately capture the traffic impact and genuinely price road space. Something like $0.10/mile in Manhattan below Central Park would probably be about right, and a lower rate for everywhere else.

  • Kevin Love

    How about the fee in transit-rich areas being set as the subway cash fare. That way when transit fares go up, taxi fees automatically go up also.

  • Larry Littlefield

    Perhaps the fee should be automatically waived during the next strike for a 20/50 pension.

    In any event, this is about finding someone less politically powerful to make pay. All vehicles should pay.

    Perhaps the problem is the state legislature likes hidden graft. How about the MoveNY plan, with with toll exemptions for state legislators and their top ten campaign contributors?

  • If I’m reading this right, then Uber is already paying more to the state than yellows (the MTA is just a state agency). If the state wants Uber to pay more to the MTA, it is very easy to measure total sales tax revenue from Uber and earmark that directly for the MTA. No change in tax policy needed.

    On the other hand, if there is a political appetite for completely changing the tax structure for both yellows and Uber (and I’m not so sure there is), then the proposals in this article make a lot of sense.

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  • Josef Szende

    Saw TLC Commissioner Joshi speak this morning in Brooklyn. She said the change needs to come in Albany but that she and the administration support a leveling of the field so that all FHV contribute to the MTA. Hope that translates into vocal action from her, the Mayor, and the City Council.

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  • J

    Yes, but every driver should pay this, as Stephen mentioned.

  • Rob Black

    Uber rakes in billions yet doesn’t pay any mta, disability, medallion costs.

  • Rob Black

    Popularity can be fabricated. Just don’t pay MTA, disability, medallion, city taxes and instead pay the media to report on uber non-stop.
    Clearly regulatory failure is what gave uber its “advantage”, not the app (taxi and limo apps pre-date uber).

  • Rob Black

    Taxis pay MTA, not uber.

  • New York

    How about this sunshine. No taxi passenger pays a cent to the MTA. If I didn’t use it, I won’t pay for it. If I wanted to pay the MTA, then I would have used the bus or train. But I didn’t, so I won’t.

    The MTA contrary to popular belief is a private company impersonating a department of the city of New York.

    They should be sued for money laundering, felony charges of extortion and racketeering, and illegal conversion.

    If that Ponzi Scheme doesn’t stop real soon, the crap will hit the fan in a porponderance of law suits, criminal and felony charges… Even if we have to go to the Supreme Court directly to the grand jury with a list of names and organizations.

  • New York

    And they shouldn’t.

  • New York

    I pray it never happens. The MTA is a private company and a monopoly on surface and subway transportation. They should pay back every cent of those MTA surcharges. Why should a dinner pay a Food Surcharge to McDonald’s for people who didn’t eat there. Same thing. Taxis pay an extortion of fees at gun point… Stop the madness!

  • New York

    And the taxis passenger shouldn’t either. I should start a boycott against all taxis for charging us that Ponzi Scheme.

  • New York

    How about the MTA pay a surcharge to the taxi drivers…

  • New York

    How about we don’t. You want to pay for the MTA, then take a bus.

  • New York

    Because why would you be OK paying 50 cents to the privately owned MTA when you took a private car?

    How about you pay a 50 cent fee for the Taxi drivers when you take a bus?

    That’s leveling the field based on your comment.

  • New York

    Why is everyone OK with paying the 50 cent fee to the privately owned MTA when you didn’t use their service? How dumb are people today?