The $1 Levy Across Taxi Services
From 1 February 2018, authorised taxi service providers, booking service providers, and rideshare services like Uber in NSW will be forced to pay $1 per trip as part of the ‘Passenger Service Levy’ the NSW Government has put in place as a measure to compensate the declining value of taxi licenses.
After the online ridesharing platform Uber surged in popularity back in 2015 upon legalisation, the NSW government and Transport Minister Andrew Constance announced an industry assistance package of up to $250 million would be introduced to assist the taxi industry to adjust to new competition.
On January 30, Uber sent an email to all users stating that the Levy would be passed onto the users of the platform, which as expected when the levy was first discussed in 2015. Uber announced this will be passed on to users through a $1 fare increase for each trip taken. The email called upon users ‘who think this tax is unfair’ to contact the NSW Transport Minister.
Too Little – Too Late?
The taxi industry has been overwhelmed by the growth of Uber and clearly not happy with the decline in the demand for services. The NSW government has announced the reasoning behind the Passenger Levy is to assist many Australians who have invested life savings into taxi and hire car plates. The government has not so far stipulated to how the package will be broken down to assist drivers, but some reports indicate $20 000 will be paid to licence owners to assist with the declining value. It is not yet known the extent this levy will extend to base operators or taxi drivers that do not own the plates.
The Passenger Service Levy will apply as a $1 levy over 5 years to all trips taken in densely populated areas in NSW. Certain remote areas of NSW will be exempt from the tax. To check if you will be affected by this, refer to the map in the pointtopoint handbook. Whilst NSW has taken action to compensate the decline in taxi use as a result of rideshare services, it remains to be seen whether customers will accept the fair increases lightly.
The NSW Government’s Passenger Service Levy promotes protection and reimbursement to attempt to ensure a level playing field. It is unclear whether it will be seen as a positive by all parties involved, including taxi drivers who do not own licences and receive no additional payments with the changes. Whilst it is up to each service provider to decide whether to absorb the levy, it seems likely that the taxi industry, Uber, and other ridesharing platforms will all pass the $1 levy on to customers. The levy will be imposed for 5 years to raise $50 million per year for industry changes.