The following column is an opinion piece and reflects the views of the author and not those of AllOnGeorgia.
By: Marc Hyden, Director of State Government Affairs at the R Street Institute, and he is a longtime Georgia resident. You can follow him on Twitter at @marc_hyden.
John D. Rockefeller was once asked how much money it takes to make a man happy. He responded, “Just one more dollar.” The oil magnate died many years ago, but his sentiment is still alive and well right here in Georgia. Despite being flush with cash, having an overflowing rainy-day fund, and considering a massive industry-specific tax cut, Gold Dome lawmakers are in the process of raising taxes elsewhere — unnecessarily, of course.
According to an Uber press release, after passing the House of Representatives, Georgia senators have added a last-minute amendment to HB 276 that would assess an excessive tax on Georgians who use rideshare apps like Uber and Lyft. The amendment text hasn’t been published on the Georgia General Assembly webpage yet, but the release states that the proposal would levy “an 8.9% sales tax on rides in Atlanta and an average 7% sales tax on rides throughout the rest of Georgia.” This would be the highest rideshare tax in the country, which could easily cripple the industry and harm public safety in the process.
Uber and Lyft expanded into Atlanta in 2012 and 2013, respectively, and have since spread across the Peach State. It’s easy to see why: These ridesharing companies provide a quality on-demand service that focuses on customers’ needs and uses a dynamic model that keeps consumer prices low. As such, rideshare use has exploded — providing Georgians with new jobs and riders with more options.
Imposing such a large tax could have far-reaching and overwhelmingly negative consequences. Generally, rideshare companies strive to maintain low prices to attract customers, which keeps drivers in business. But additional taxes of this magnitude will cause a surge in prices that will make riding with Uber or Lyft less attractive to consumers. As their customer base dries up, many rideshare drivers could find themselves out of business.
One need only look to other parts of the country to see how this exact scenario will play out: Some of the biggest tax-and-spend states have tinkered with rideshare price regulations, and the results have driven up costs and stripped drivers of their livelihood. Georgia’s proposed tax is no different
Incentives matter, especially in business and public safety. This tax hike would act as a disincentive for consumers to use rideshare services, which will in turn have a negative effect on public safety. Since the introduction of Uber and Lyft in the Atlanta metro area, DUI arrests have plummeted and the roads are much safer. This is because rideshare services are convenient and cheap, prompting intoxicated Georgians to use them rather than driving home from the bar. As Cobb County Assistant Solicitor General Steven Ellis cheerfully observed a few months ago, “I really think rideshare services are the biggest factors reducing impaired driving here in Cobb and Metro Atlanta.”
After looking at the data, it’s hard to disagree. But an unnecessarily massive rideshare tax would risk putting more intoxicated people behind the wheel. It would also inconvenience the thousands of customers who use ridesharing apps to commute to work, get home from the airport, or ensure that elderly relatives make it to doctor’s appointments. Georgia simply cannot afford these results.
The truth is that taxing for the sake of taxing is silly. Georgia is in a good financial position, and many Peach State legislators have signed the anti-new tax pledge. Beyond these matters, this proposal looks like it will do little more than hobble an industry, cause unemployment and promote drunken driving. Given all of this, it’s hard to see how a tax of this magnitude can be justified unless legislators, like Rockefeller, are just perpetually seeking “one more dollar.”