Welcome
Daily Tax Report: State

Uber, Lyft Tax Headed for San Francisco Ballot in November

July 23, 2019, 11:56 PM

Users of ride-share services including Lyft and Uber would have to pay up to a 3.25% tax under a November ballot measure in San Francisco.

Supervisors unanimously approved July 23 placing the proposed traffic congestion mitigation tax on the fall ballot. The measure is a compromise reached with Uber Technologies Inc. and Lyft Inc. in a handshake agreement last July that halted a planned fall 2018 ballot measure targeting a tax on transportation network companies.

“And now it’s time to turn it over to the voters, and hopefully two-thirds of the electorate will see fit to do what Portland, Massachusetts, New York, and others are doing” by placing taxes on rideshares, Supervisor Aaron Peskin said.

Passengers for rides originating in San Francisco would be taxed 1.5% for a shared ride or 3.25% for a solo ride starting in 2020. The tax—which would sunset in 2045—also would apply to any self-driving autonomous vehicle services introduced later. Rides in zero-emission vehicles and shared rides would be taxed at 1.5% and all other rides taxed at 3.25%.

Revenue would be used to fund transit and transportation safety improvements. The measure requires a two-thirds majority vote as revenue would be dedicated to a specific purpose. The tax would annually raise $32 million, the Office of the Controller said in an analysis.

Mayor London Breed (D) and Peskin are co-sponsoring the proposed initiative.

The compromise is one of the few reached between San Francisco and ride-hailing companies, which have had a long-running battle over oversight. Uber on July 19 appealed to the California Supreme Court a ruling upholding the city’s subpoena seeking information that includes driver violations, hours and miles logged, and service by zip code.

Ballot Slimming

The city’s Nov. 5 ballot is shaping up to be slightly less tax-heavy than it looked earlier this summer.

Supervisors tabled until next spring a proposed stock-based compensation tax initiative that would place a 1.12% tax on stock-based compensation to be paid by businesses that offer such compensation. The proposal is now planned for the November 2020 ballot, when the presidential election likely will draw a bigger crowd.

They also delayed until the March 2020 ballot a 0.1% to 6% surcharge on CEO salaries to fund a universal mental health program. San Francisco companies that pay CEOs 100 times the companies’ median wage would pay a gross receipts tax to fund Mental Health SF and substance abuse programs under the initiative. The proposal was postponed to give supervisors more time to work with the mayor and Department of Public Health.

Still proposed for the ballot: Breed and board President Norman Yee asked the city controller to draft an initiative to create a next-generation tax to replace the gross receipts structure voters adopted in 2012.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editor responsible for this story: Jeff Harrington at jharrington@bloombergtax.com

To read more articles log in. To learn more about a subscription click here.