Government

Sales tax under consideration for cab, ride-hailing services

Bill seeking cut to Iowa income tax would add new sales tax

(File photo) Airport Shuttle Service and taxi vans wait in the taxi loading zone at The Eastern Iowa Airport in Cedar Rapids on Tuesday, Aug. 23, 2016. (Liz Martin/The Gazette)
(File photo) Airport Shuttle Service and taxi vans wait in the taxi loading zone at The Eastern Iowa Airport in Cedar Rapids on Tuesday, Aug. 23, 2016. (Liz Martin/The Gazette)

Iowans could be facing more expensive Uber, Lyft and cab rides.

A section of House Study Bill 671, a plan to cut state income tax rates, would place a sales tax on traditional taxi and ride-hailing services.

While a lawmaker said the tax would create a level playing field for all transportation services, Uber thinks the tax would harm its drivers.

“The Uber tax is wrapped in taxing all forms of transportation. We haven’t made a determination where that’s going,” said House Ways and Means Committee Chairman Guy Vander Linden, R-Oskaloosa. “It’s intended to level the playing field for limousines, Uber and everybody. We would probably lean in that direction.”

Under current state law, limousine services are subject to sales and use taxes, according to the bill. If passed, this specific portion of the bill would add other forms of “personal transportation service” like ride hailing and taxi trips as well.

Taxing such trips isn’t all that common. Just over a dozen states and municipalities across the country have set taxes or fees on ride-hailing services or their customers, according to a February New York Times report.

“Since launching in Iowa in 2014, Uber has provided thousands of people across the state with flexible earning opportunities and safe, reliable rides at the tap of a button. This new bill would force Iowans to pay a tax on every trip they take and hurt the local men and women who rely on Uber to make extra income or get around town ...,” said Uber spokeswoman Charity Jackson in an email.

Iowa law already requires companies like Uber and Lyft to pay a one-year permit fee of $5,000 to operate.

l Comments: (319) 339-3172; maddy.arnold@thegazette.com

James Q. Lynch of The Gazette contributed to this report.

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