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Massachusetts taxi drivers say surcharge on Uber is useless

Intended beneficiaries of a new Massachusetts surcharge on ride-sharing services such as Uber and Lyft call the fee worthless and say they never wanted it.  
It’s the latest skirmish in the nationwide battle between traditional taxi companies and the new ride-for-hire business model.
 
Massachusetts legislators this summer legalized ride-sharing services statewide and exempted them from local taxi regulations. The new measure, which was signed into law on Aug. 5, imposes a 20-cent-per-ride fee on ride-sharing services. Five cents out of the 20 is earmarked for the taxi industry. But many taxi industry insiders call the fee a feel-good measure that won’t help drivers who are losing their livelihoods.
 
“We don’t want the nickel. It’s silly,” Boston taxi driver Steve Goldberg told the American Media Institute. “It’s being portrayed as this new industry has to bail out the tired taxi industry. Nobody’s looking for any group within the ride-for-hire industry to bail out another. All we’re looking for and all we were hoping for is a level playing field. We’re not looking to get a five cents per ride handout.”
 
Donna Blythe-Shaw, who until this spring ran the Boston Taxi Drivers Association, a group of drivers organized by the United Steelworkers, said the fee is useless for taxi drivers.
 
“It means absolutely nothing, quite frankly,” Blythe-Shaw said. “It’s not going to have any impact. First of all, the legislation doesn’t go into effect until November. In the meantime, they are still out there against the odds. Every day that goes by they lose more and more market share and more and more money. They’ll never be able to recoup what they’ve lost in the medallion value.
 
“I don’t think anybody understands what the five cents means or what it will do. It’s supposed to apply to the taxi industry across the commonwealth, but the taxi industry is not the same throughout the commonwealth.”
 
Some taxi drivers own medallions and drive their own cars. Others own medallions and work as independent contractors for larger businesses. Some own no medallion and are hired by fleet companies. It is unclear how the five-cent fee will be distributed throughout the industry, as the regulations have yet to be written.
 
Larry Meister, manager of the Independent Taxi Operators Association in Boston, said the fee was more about protecting banks than taxi drivers.
 
“There’s a lot of medallion owners that have large loans out on their medallions. I believe the banking lobbyists got that put in there,” he said. “That’s not something we asked for. As an industry, we did not ask for this to be put in there; if we asked for fees they would’ve been a lot higher.”
 
Massachusetts banks did lobby for the fee to be included in the bill, Massachusetts Bankers Association spokesman Bruce Spitzer said.
 
“As far as taxis are concerned, we had a dog in the hunt because a lot of our local lenders had loans for individual taxi owners to purchase medallions,” he said. “And of course the entry of Uber and Lyft into the market has undercut the value of those medallions.

“We get the free market and we understand competition, but on the other hand this has been a market that has been significant for years, and for it to crash and burn would not be beneficial to anyone.”
 
Frank Conte, director of communications for the Beacon Hill Institute, a free-market think tank at Suffolk University in Boston, said the fee was a political compromise designed to provide some small compensation to an industry that no longer enjoys monopoly status.
 
“The medallion owners had exercised a printing press monopoly for many years over an unhappy consumer,” Conte said. “The question legislators faced was this: How much of the stranded costs are we going to pick up? The stranded costs here are the medallions that were very, very lucrative for many years and expensive to buy but are now next to worthless.
 
“History shows that we can’t always compensate the losers. It’s an efficiency question at some point.”