What to Know about the Congestion Surcharge

Since February 2nd, yellow cabs are turning over $2.50 every time they pick up, drop off or drive through with a fare 96th Street and below.  It is devastating a workforce already in crisis, that is not the cause of the congestion, has already paid $650 Million to the MTA, and whose destruction will mean the collapse of the 100-year yellow cab industry which still serves 300,000 street hails per day and will be 50% wheel chair accessible in 2020.  Uber spent $100,000 to lobby for this version where App companies get a concession tax rate of 75 cents.  This Uber-paid for plan is unfair, cruel and in the end, will destroy a 25,000-workforce industry and leave the MTA underfunded.  We are calling on our State Lawmakers to grant an Exemption for Yellow and Green Cabs by Amending N.Y. Tax. L. §1299.

It’s unfair and it’s cruel.

Taxi drivers are under severe economic crisis.

  • There were suicides by 8 drivers last year.  There is a crisis of poverty and the surcharge will push thousands of us into bankruptcies and evictions.

  • Yellow cab trips down 40% since 2005 and are expected to drop 30% due to surcharge

Tips are already wiped out. Small trips are fading away.

  • Most trips in zone are small fares – that means 30% tax on taxi trips while general sales tax is 8.75%.

  • 90% of yellow trips are in the zone, effecting yellow cabs the most and disproportionately from all other private and commercial motorists.

  • The surcharge will cost drivers $15,000 in income for the year.

  • Most yellow cabs on road today and all green cabs are operated by the owner-driver.

  • Drivers will not get a raise for our own income in years.

Yellow and green cabs already paid our fair share.

  • Yellow & green cabs already pay 50 cents for MTA.

  • Since 2009, we have paid $650 MILLION toward MTA.

  • For years, medallion sales contributed to the city’s general budget and even today, medallions pay $1,000 tax stamp every year + daily pay toward MTA tolls.

  • The MTA’s Taxi Program for Access-A-Ride is already saving the State on average $40 per trip.

This tax will kill an industry trying to bounce back after the failure to regulate Uber & co.

  • The Taxi and Limousine Commission REFUSED to vote to regulate the Surcharge, with Commissioners calling its impact Devastating and Unconscionable. 

  • In 2013:  13,650 yellow cabs; now 13% medallions in storage.

  • There were more bankruptcies in JANUARY 2019 compared to whole year of 2015, 2016 and 2017.

  • NYC was supposed to issue 18,000 green permits, but only 6,000 were issued and out of which today only 3,000 green cabs are on the streets.

Yellow cabs are being singled out

  • Uber spent $100,000 in lobbying last year for a special carve out:  as long as the passenger requests a group ride then the tax is only 75 cents.  Uber and Lyft don’t have to match the request so the trip can remain just one customer at the 75cents rate.

  • Unlike other corporate taxes, the MTA tax, or conventional sales tax, which assess a 10% penalty, the congestion surcharge law calls for an immediate 200% penalty for any late payment. Such a penalty scheme is completely unprecedented in New York Tax Law.

  • Comprehensive Congestion Surcharge on private cars and trucks would begin at 60th St., would exempt the FDR, there would be exemptions for motorists facing “hardships” or with accessible vehicles.  The Congestion Surcharge on taxis begins at 96th Street, includes even driving through the FDR, and there are no exceptions.

Uber, Lyft & co. are largely responsible for the drop in MTA revenue and increase in congestion.  

  • While yellow and green cabs pay the $0.50 surcharge, Uber and Lyft only pay sales tax, of which only a fraction of 1% goes to the MTA. 

  • In one day, a double-shifted taxi that makes 25 trips per shift collects $34.54 in tax revenue, of which $27.40 directly funds the MTA. On the other hand, in one day of full-time work, an Uber car may bring in $20 in general sales tax, handing over only $0.75 to the MTA.

  • Uber and Lyft meanwhile have targeted MTA passengers, further undercutting mass transit revenue.

  • Uber, Lyft and other App-based dispatch companies operate a business model that depends on saturating the streets with vehicles so they can be the first to monopolize. 

  • Uber, Lyft & co. have 86,000 cars in NYC even though drivers are empty 48% of the time.

Instead of holding Uber accountable, this version of congestion pricing rewards a business model that hurts our city.

  • Any further loss of revenue would devastate the taxi industry, giving Uber and Lyft a higher chance at monopolization.

  • Until May 2017, Uber profited off sales tax by unlawfully charging its commission on top of the tax. Uber also passed the cost of the tax onto the drivers, rather than adding it to the passenger's fare. For years, a tax obligation was turned into a windfall for Uber.

  • Uber has spent $100,000 lobbying for a version of CP that would give it an advantage against both taxi, livery and black car competitors, as well as against the MTA itself.

This surcharge will destroy the yellow cab industry; and it will leave the MTA still underfunded. 


Another Way Is Possible: Tax the Rich, Not the Poor!

1.   $3.5 Billion from Closing the income tax loopholes for hedge fund managers (people who sell stocks don’t have to pay income tax on all of their sales.)

2.   $2.3 Billion from a multi millionaires’ tax.  Right now, income above $1 Million is all taxed the same rate.  New tax would set up new tax brackets so $2, $5, $100 million incomes would be taxed at their own bracket rather than at $1 million.

3.   $650 Million from the Luxury Second Home Tax on homes valued at $5 Million or more and are not the main home where the owner lives.


What the Exemption Means for App Drivers

Because of the TLC’s rule requiring App companies pay drivers on distance + time at the regulated rates, drivers are protected against the companies cutting rates to make drivers absorb the surcharge.  And because a federal lawsuit filed by our members stopped Uber from taking the sales tax and Black Car Fund (BCF) surcharge out of drivers’ income, drivers are protected against the companies passing the surcharge cost onto the drivers.  The companies protected their own interests by lobbying for a concession surcharge rate of 75c as long as the customer requests a group ride – and here’s the catch – the company doesn’t have to match them.  

So our victories protected our App members, now let’s look at how yellows and greens are especially harmed:  the surcharge effects 95% of yellow trips, and there is no other part of the city where drivers would find the same density of street hails.  In other words – the surcharge is aimed at deliberately reducing ridership for a sector with high regulated and fixed expenses that’s already suffering a crisis.  

Taxi fares already dropped by 40% between 2015 and 2018 and with the surcharge, they are expected to drop 30%.   That’s a loss of $15,000 income for people barely making $30,000.  Of the 11,000 taxis still on the roads – 13% medallion are sitting in storage – 6,000 are now operated by individual owner-drivers, some coming out of retirement in their 60’s and 70’s.  Owner-drivers already lost their credit line and retirement as the medallion value has plummeted by 80%.  Now, they are fighting to keep their full-time job.  25,000 drivers still drive yellow.  Drivers facing poverty are being further crushed by this surcharge.  Yellow cabs, meanwhile, are not new to the congestion zone.  They’ve been there for generations, and they are at a record low number.  

The city was supposed to issue 18,000 green permits by now.  DRIVERS fought hard for the creation of the sector – one where all permits are owned only by the drivers.  There are 3,000 greens on the roads today.    

Yellows and greens didn’t cause the congestion, they’ve suffered because of it, they contributed $650 Million to the MTA since 2010 (through the 50 cents tax + vehicle sales taxes), and they will be devastated by the surcharge.  It’s a serious crisis – and make no mistake, a crisis made by political will.  

Without the exemption, we all know yellow and greencab driver families will face major bankruptcy and eviction crisis, destroying thousands of lives.  On the other hand, winning the exemption lets us fight for a Raise for All Drivers by establishing the same minimum meter rate for yellow, green and Apps - $3.30 initial, $3/mile and 60c per minute.  App drivers would get minimum 80% of the fare!  TLC authority to regulate rates has protected App drivers from the surcharge crisis.  And the rates we won are a good start, but our campaign for a real raise for all continues!