Congestion Surcharge on For-Hire Vehicles is a Sham

A lawsuit was filed against the State and City of New York as a result of the Congestion Surcharge that is set to go into effect on January 1, 2019. The congestion fee on taxis and for-hire vehicles was enacted under false pretense of reducing congestion but is really just a cash source for the strapped MTA. A judge issued a temporary restraining order preventing the Congestion Surcharge from going into effect. A hearing is set for January 3, 2019 for the Court to determine if the Congestion Surcharge should go into effect, as the state wants, or order a stay until the court case is resolved.

The court case was filed by yellow taxi owners, who argue the law discriminates against them.  The fact is, it’s also bad for the for-hire livery industry.  The law, set up to favor behemoths like Uber and Lyft, could put it out of business; residents of Northern Manhattan and the boroughs, who have long relied on local liveries to get around, will also suffer.

Fortunately, there's still time for the state to act and save these small businesses and protect riders. In its rush to pass it, the state ignored the law’s impact on hundreds of for-hire livery bases and some 15,000 drivers. 

Here’s how: the Congestion Surcharge law requires a $2.75 fee to be added to rides below 96th street in Manhattan. The financial responsibility of remitting the money to the state rests with companies, not drivers. This fits perfectly with companies like Uber and Lyft because they collect the fee from the passenger through their apps.

On the other hand, the law is completely incompatible with the livery base model. In our business, the driver, NOT the base, collects the fee (in cash) from passengers. The livery base is then dependent on the driver passing the fee to it before the base can pass it along to the state.

Livery bases will be penalized financially for failing to pass on the collected congestion fees. Yet, the law carries not a single provision protecting livery bases against driver refusal to pass the collected fee. All this for a sector that probably services 1% of its' trips below 96th Street. We can still fix this law and help small car services survive in the age of Uber.

If the judge today allows the law to move forward, New York State should amend the law to either exempt neighborhood livery service, given the very few trips that will apply to them, or replace the per-trip fee with an annual congestion fee that is paid by the driver at the beginning of each year.

This kind of regulatory support will not have a negative financial implication to the state, but will go a long way towards protecting small livery businesses.

To do any less would essentially lead to the extinction of the industry and fewer transportation options for New Yorkers.