Uber isn’t the new “sharing economy,” it’s the old Underground Economy

Read TTA president Gail Beck-Souter's Toronto Star opinion piece here:

It’s a busy week for politicians – who are paid with taxpayers’ dollars – to be discussing the mythical “sharing economy.” Tim Hudak plans to introduce a private member’s bill at Queen’s Park on Oct. 29 and Toronto councillors and staff are heading to the Aga Khan centre the same day for an in-depth discussion.

While the people who are paid in taxpayers’ dollars are pontificating, perhaps tax-paying businesses could get a word in edgewise: operations like Uber and AirBnB are not “sharing.” They are avoiding the taxes paid by legal, legitimate transportation and hotel industries and enjoying an enormous competitive advantage by doing so. This is not a “sharing economy”; it’s the Underground Economy. It’s not new, it’s not right, and it’s not good for Toronto or for Canada.

Take Uber as an example: every transaction conducted by Uber is processed in the Netherlands. Fortune magazine published an incredibly detailed description of how Uber avoids taxes all around the globe, describing the scheme as the “Double Dutch”:

“Let’s say that a passenger hails an Uber and takes a $100 ride across Rome... The payment goes to Uber B.V., which sends $80 back to the driver. The driver is responsible for paying his own taxes on that income. Of the $20 that’s left over, let’s say that Uber subtracts half to cover costs, leaving $10. But that’s not its taxable income. Uber B.V. will ultimately book only 1% of that initial $20 in revenue, or 20¢, as income. Uber B.V. then sends the balance of $9.80 to Uber International C.V. for the royalty… Uber International C.V. has no employees and, though it is chartered in the Netherlands, lists the address of a law firm in Bermuda as its headquarters.”

Every elected official in Canada should be required to read this Fortune article before speaking up to legitimize the Underground Economy, which Statistics Canada notes generated $42 billion in 2012 and is growing at almost the same rate as the legitimate economy.

In the first two quarters of this year, Beck Taxi, Co-op Cabs and Diamond Taxi remitted almost $2.5 million in HST for dispatch and other services.

Would passengers enjoy paying less money for their rides if we did not have to collect taxes? Undoubtedly: Uber’s lower rates are a huge part of its draw.

Are Tim Hudak or John Tory proposing that Toronto’s taxi industry be given a “tax holiday” while it competes with Uber and its Double Dutch scheme? Don’t hold your breath.

If governments wish to forgo the taxes they collect from law-abiding businesses, they need to create one level playing field for all businesses. The taxi and hotel industries would be happy to stop collecting and remitting taxes; our customers will be delighted not to pay them.

Every taxpaying business that obeys the law is subsidizing Underground businesses which pay nothing. Legitimate, tax-paying businesses are at an extreme disadvantage competing with businesses in the Underground Economy which neither pay employees nor remit taxes.

What’s more, it is an incredible slap in the face to hard-working business owners to be told by politicians who are paid with the taxes we generate, collect and remit that we must be able to compete with an Underground Economy which does none of these things.

Gail Beck-Souter is the General Manager of Beck Taxi and president of the Toronto Taxi Alliance.

http://www.thestar.com/opinion/commentary/2015/10/26/the-underground-economy-is-not-sharing.html

UberX operating illegally; it’s time for enforcement

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Earlier this year, Montreal impounded 40 illegal UberX cars. Toronto can do the same.

 

October 22, 2015 (Toronto) – The Toronto Taxi Alliance (TTA) commends Licensing and Standards Executive Director Tracey Cook for taking action to declare UberX an illegal business in Toronto and hopes to see rigorous enforcement measures launched.

“We hope to see Tracey Cook and Licensing and Standards acting as responsible, effective regulators. Immediate enforcement of Toronto’s by laws on UberX must occur,” says Sam Moini, spokesperson for the Toronto Taxi Alliance

“Uber’s blatant disregard for the laws and standards of the municipalities upon which it descends is nothing short of appalling. Uber does not simply offer unfair competition to existing regulated businesses; Uber mounts a direct assault on the rule of law. The TTA commends Toronto for taking a strong stand on behalf of our democratically elected city government and its right to design and implement by-laws which benefit the entire city, and not just one foreign private sector business.

“In the injunction attempt earlier this year, Uber got through on a loophole because, as Justice Dunphy pointed out, Toronto’s definition of a ‘taxi’ was too weak to capture Uber and UberX. That problem was addressed at the September 30th Council meeting.”

Also at the September 30th meeting, Councillors declared Uber an illegal business and asked Uber to cease operations until a new by-law which covers all ground transportation services – taxis, limos, and Uber – is prepared and presented. Uber replied by stating it would not cease operations but would continue to offer services deemed illegal in Toronto.

After the September 30th Council meeting, Mayor John Tory told media, “I don’t believe it is then an act of good corporate citizenship; in fact I think it’s exactly the opposite, for them to turn around and… give us the one-finger salute again.”

On October 15th, Calgary mayor Naheed Nenshi took the unprecedented step of warning residents in a written statement against driving for Uber: “I strongly suggest that you don’t drive for Uber and that you don’t use Uber until the insurance and regulatory issues are sorted out. If you drive for Uber, you should be aware that you are breaking the law.”

“Toronto’s taxi industry is made up of law-abiding business people who comply with all of the City’s regulation concerning licensing fees, background checks, commercial insurance, metered rates, accessibility and driver training,” Moini points out.  “We are not afraid of competition; but we cannot compete against a company that believes it is above the law and acts accordingly.”

The TTA looks forward to seeing the proposed new by-law to regulate ground transportation in Toronto, expected early in the new year.

“We’d like to see it before Christmas, frankly,” Moini says. “The sooner the better.”

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Paris, Montreal, Guelph enforce the law – why can’t Toronto?

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October 2nd, 2015 (Toronto) – The Toronto Taxi Alliance today called upon Mayor John Tory, City by-law officers and Toronto Police to enforce the law regarding Uber.

“All of the laws required to stop Uber already exist on the books,” says Sam Moini, spokesperson for the Toronto Taxi Alliance. “There is no need to delay.”

On Wednesday, September 30, City Council voted to close the loophole which has allowed Uber to operate outside of regulation. A motion was also passed calling upon Uber to cease operating UberX while new regulations are drafted. Uber responded in a statement saying they did not intend to obey the law.

“We are not asking for any new laws or regulations. We are simply asking officials to enforce the laws which already exist. City by-law officers could more aggressively enforce the by-laws; Toronto police are not enforcing the Highway Traffic Act. Two weeks ago, Guelph police charged five UberX drivers with violating Section 39.1 of the Highway Traffic Act in one day.”

While Mayor Tory claims Toronto does not have the resources to stop Uber, Moini points out that other jurisdictions have found better solutions than a car-by-car check: “France arrested the top Uber executives who refused to obey French law; Montreal police began impounding UberX cars, and drivers got the message very quickly.

“Why is Toronto not doing this?”

 

 

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ENFORCE THE LAW: Backgrounder

Highway Traffic Act (HTA)

 

Picking up passenger for compensation prohibited without licence, etc.

39.1 (1) A driver of a motor vehicle other than a bus shall not pick up a passenger for the purpose of transporting him or her for compensation where a licence, permit or authorization is required to do so by,

(a) the Public Vehicles Act;

(b) a municipal by-law passed under Part IV of the Municipal Act, 2001;

(c) a regulation made under the Department of Transport Act (Canada); or

(d) an airport or airport authority,

except under the authority of such licence, permit or authorization.

Toronto Municipal Code

 

  1. 545.2 (9) of the Toronto Municipal Code (the Code) requires every owner and every driver of a taxicab to take out a licence from the Municipal Licensing and Standards Division (MLS)

 

  1. 545-139.2. of the Code provides

 

  1. No driver shall drive any taxicab unless the owner of the taxicab is licensed as such under this chapter.

 

  1. No owner shall allow any person other than a licensed driver to operate his or her taxicab.

 

  1. No driver, while having the care and control of a taxicab, shall permit any person other than the owner or an employee of the owner of the taxicab to drive it.

 

  1. Every owner of more than one taxicab required to be licensed under this chapter shall take out a separate licence for each taxicab.

 

  1. Every driver and owner shall carry his or her licence with him or her at all times while operating a taxicab and shall produce the licence for inspection when requested to do so by the Municipal Licensing and Standards Division or a police officer.

 

  1. No owner shall permit any taxicab which he or she does not own to be driven under the authority of his or her owner's licence.

 

Therefore an Uber driver in Toronto, unless operating under the authority of a Taxicab Licence issued under S.545.2 (9) of the Code, is committing an offence under s39.1 (b) of the HTA as well as under the above noted sections of the Toronto Municipal Code.