A $240,000 accounting error reported by Uber this week has prompted the Philadelphia Parking Authority to push harder for a flat 50-cent tax on all ride-share trips to cover the costs of regulating the industry.
The tax, however, is facing pushback, including from groups that fear it will unfairly penalize poorer riders.
The error from Uber came up at the PPA’s monthly board meeting Tuesday morning. The San Francisco-based tech company wrote a letter to the PPA explaining that it had underestimated the amount owed to the PPA by $240,393, or 690,924 trips, in 2017. PPA’s portion is based on Pennsylvania legislation that requires ride-share companies to pay a 1.4 percent tax on their gross receipts. The PPA keeps a third of that, while the rest goes to the Philadelphia School District.
Uber’s reported revenue for 2017 left out rides from wheelchair-accessible vehicles, rides on the last day of each quarter, and all rides in some parts of Philadelphia due to an error in the way the app codes the city boundaries.
The PPA has limited ability to audit revenue from ride-share companies such as Uber and Lyft, said Scott Petri, PPA chief executive. He pointed to the error as further evidence of the need for changes in state legislation that frames the PPA’s oversight of the ride-share industry.
Dave Raiser, an Uber representative at the PPA board meeting, said only small areas of the city were omitted, but PPA board member Al Taubenberger, also a City Council member, said he believed much of the area near the Delaware River waterfront was left out.
Raiser noted that the error was in Uber’s geocoding software and would not have been spotted in a financial audit.
Uber reported the error on May 4 and has made up the shortfall, Raiser said.
“We are invested in financial discipline and building a transparent relationship with our regulators,” Uber spokeswoman Danielle Filson said, “which is why we undertook a detailed audit and adjusted payments where needed.”
Petri reiterated his request for the legislature to approve a 50-cent tax on every ride-share trip before Harrisburg takes a break in June.
“June is critical,” Petri said. “The legislature will break, and if they don’t fix this, our hands will be tied.”
He said the tax would help provide money to aid the PPA’s overwhelmed ride share, taxi, and limousine regulators and would have the added benefit of bringing in $8 million to $10 million more each year for the School District. Advocates for the School District asked at Tuesday’s board meeting for the PPA provide $25 million a year to schools. In the recently ended 2018 fiscal year, the PPA raised about $2 million from ride-share industry and $13.2 million from parking fines for the School District.
The new 50-cent tax has strong opposition. The city’s cab drivers, who Petri also has suggested should pay the per-ride tax, have said it would hurt their already-battered industry.
Pennsylvania Auditor General Eugene DePasquale, who harshly criticized the PPA’s finances in an audit this year that included 117 recommendations, also opposes an increase in fees.
“While the PPA claims the fee will generate additional funds for the city and the School District of Philadelphia, the PPA needs to completely clean up its operations and rebuild some trust with residents before adding fees,” DePasquale said in a statement Tuesday.
The PPA received a letter Tuesday signed by leaders of the NAACP, the Urban League of Philadelphia, and the African-American Chambers of Pennsylvania, New Jersey, and Delaware contending that the 50-cent tax would be handed along to riders and discriminate against poorer ride-share users.
“The service provides an affordable option for people to get to work, a doctor’s appointment, or their church or mosque — especially for those who cannot afford a car of their own, cannot find accessible SEPTA service, or cannot find a taxi driver willing to drive him or her where they need to go,” the letter said. “A new ride-sharing fee that hits the poor and working class the hardest is unacceptable.”
Petri noted that 95 percent of the audit’s recommendations have been implemented and questioned why a 50-cent surcharge was worse for poorer riders than surge pricing during busy travel times. Chicago and Portland, Ore., have per-ride taxes, and New York just approved one that for some rides is as high as $2.75.
The letter cited a statistic from Lyft that nearly 70 percent of the company’s rides in the city either began or ended in an underserved or low-income neighborhood. The company came to that number by looking at neighborhoods cited by the federal government as eligible for low-income tax credits, but Lyft, like Uber, does not share trip data that would confirm that assertion.
And that’s part of the problem, Petri said. The PPA has no ability to confirm ride-share companies’ trip information or revenue numbers and must essentially take what these companies report on faith.
Whether the legislature will agree with Petri about the need for regulatory changes is unclear. The change in the taxing formula could happen in a new bill but also could be done with wording added to an omnibus bill, said State Rep. John Taylor (R., Phila.), who heads the House transportation committee.
“Certainly the Parking Authority is in an unworkable position,” he said. “It’s something that we’re going to attempt, I think. It’s just a matter of how.”