> Slowly the price advantage that Uber has by using loopholes fades away.
They don't even always have a price advantage anymore, especially if there's a surge. I needed a cab from Chicago Midway to my hotel last night, Uber's upfront price was $48 (and an eight minute wait), a regular taxi was $40 (including 15% tip) and no wait. I took the latter.
In my experience, whenever Uber is surging enough to make cabs cheaper (2.5x in my city), there are no cabs to be found. That or the cabs try to scam you by asking for extra cash off meter (happened to me on New Year's Eve).
because taxi drivers cannot, at least where i live, by law, change their fare. uber/lyft told me (and i agreed by using their service) they would change the fare based on demand.
Where I live, Uber charges less than half of what cab companies charge. But there are other ancillary benefits. Uber could be at parity with the cab companies but I would still prefer it because of:
1) Their app
2) The reliability of getting car with them vs. waiting for a cab.
3) Their vehicles are much, much, much nicer than cabs in my area.
4) The purchase experience.
Yeah, that's always been one of my points: existing cab fares are probably already close to the the price to sustain a business and pay a living wage.
Like you said, cab drivers (and probably cab company owners) aren't exactly fatcats. Meanwhile what's Travis Kalanick's net worth? How much are they paying top engineers at Uber?
Don't get me wrong, there's definitely corruption and protectionism in the existing taxi industry, but I fail to see how the low $5-7 fares are anywhere near sustainable. Is the revenue from surge pricing enough to offset the current discount?
I don't like to assume anything about the wealth of professions when I do not know the economics of their industry. I have seen a lot of businesses over the years that I assumed were barely scraping by that were actually making a killing.
Aren't cab drivers in major cities dealing with the purchase or lease of million dollar cab medallions? I believe that could factor into higher prices for consumers.
Yeah, how dare them offer a service both riders and drivers were happy using and helped hundreds of thousands poor make more money. Wilful adults entering mutually beneficial agreements? Government can't allow that insanity. Quick! Let's regulate it to death to make sure it sucks as much as what we had before. Make sure to justify it on taxes, people will buy the narrative and blame it on the evil corporation and not on the innocent incorruptible government.
I like using Uber. But I also don't like the idea of money flowing out of the country/province/city into Silicon Valley. I'd much rather that the money earned by Uber stays within Canada in some form such as a tax or investment by them into our region.
Particularly because Uber-like apps are becoming important to public transportation infrastructure. Additionally, taxi revenue coming from tourism remains in the hands of Canadian taxi companies as opposed to Uber resulting in a net positive flow of money into the country.
Sadly it doesn't address any of the problems with cabs in Toronto.
1. Cabs won't take credit cards by claiming "the machine is broken" when it's not, presumably so that they can avoid reporting tips or fees, or they might just skim your card.
2. Cabs are too expensive.
3. Cabs might not even take you if they figure the ride isn't worth it.
This app doesn't allow you to pay, so doesn't help 1. It actually make 2 worse by charging you $2 just to "hail" a cab with it. I mean, seriously? And it doesn't help with 3 either.
So they seem to get the hailing part but at a cost. Like you said, this doesn't solve the friction in payment. I would prefer something like venmo as payment option (debatable on distribution of fee, etc.). Something like pay to register for drivers and a monthly fee option for reduced pay for frequent users would be good for sustainability.
That's not too surprising. Though I will say that NYC cabs are pretty ok, at least I never have to worry about being able to pay with a credit card and they are actually cheaper than Toronto cabs, which really says something.
> 1. Cabs won't take credit cards by claiming "the machine is broken" when it's not, presumably so that they can avoid reporting tips or fees, or they might just skim your card.
I find more cabs don't use that excuse now since Uber has been breathing down their necks. Also, since you mention Toronto, there's the Beck Taxi iOS app. With it you can pick the pickup location, destination, hop in the cab, and when leaving the driver declares that the trip is over which charges one's PayPal account. It's not as cheap but if someone wants to use cabs over Uber based on principle then there other convenient options.
Using the small supplier exemption seems really doubtful to me. That pushes the tax collection liability on the driver (who can't collect taxes, since payment is through Uber app) and the limit for that is 30k$ so a lot of drivers should probably have charged taxes since they may have earned more.
In addition, my understanding (not a tax/law person) is that the 30k$ would be for the whole fare, not the driver's cut.
GST rate is 5%... But provincial sales tax could apply, at least in provinces where there is HST (Harmonized Sales Tax, administered by fed gov, divided with province.) HST varies from 13% to 15%. I wonder if we'll see provinces going after the drivers for back taxes. Revenue Quebec is notoriously aggressive in going after people for sales tax.
> That pushes the tax collection liability on the driver (who can't collect taxes, since payment is through Uber app) and the limit for that is 30k$ so a lot of drivers should probably have charged taxes since they may have earned more.
Sounds like Uber needs to update their app.
> I wonder if we'll see provinces going after the drivers for back taxes.
I'm sure Uber will do the responsible thing, stand by its drivers, and make them whole in the case that they are billed for back-taxes.
The fact that they weren't paying GST is mind-boggling. The purpose of the exemption is to let someone running a tiny hobby business sell their products without having to deal with tax headaches.
The purpose of the exemption was never to let a mega-corporation take the exemption of each employee, multiply it by the number of employees, and pretend that they don't need to pay tax.
What next? A grocery store taking the $30,000 exemption for each employee working for it? A law firm taking a $30,000 exemption for each legal aide working on a case?
Uber drivers are not employees. They are independent contractors. Uber, as part of their service, collects money from riders, giving both the rider and the driver a comfort factor as they don't have to deal with cash. As "hobby" businesses they each individually were enjoying the exemption. Now they will not - because we can't have "hobby" businesses causing discomfort to the well connected.
Ironically, this is something cab companies probably don't want. It'd be cutting off their nose to spite their face. Most cabbies are also contractors and in fact pay to use the cabs they drive on a daily basis.
It would wreck the cab industry if dispatch companies (to which cabs are exclusively tied) had to make all their drivers employees.
And good riddance, the cab industry has long been problematic in its own way, with its own worker abuse issues and non-competition problems. Disliking uber doesn't mean supporting cab medallion owners.
Am I honestly to believe the tech industry can shoot a rocket into space and do any number of miraculous things, but can't create a solvent cab hailing service that pays workers living wages and basic benefits? The word benefits makes it sound like it's a luxury, but stuff like healthcare and retirement planning is anything but, especially for low income workers. Somehow when it comes to innovation, the last place we want to do it is to helping people in a non-flashy way.
Besides, even without innovation, cabs/ubers can just cost more, or cab company owners (I don't mean the drivers) can just make less profit.
edit: I also think that welfare and healthcare should come from the government and not from companies, but I just don't understand how being profitable enough to pay people decent wages is a political problem at all. Nothing political about this - it just requires making a simple decision to divert some of your profit into something other than shareholder pockets.
> Am I honestly to believe the tech industry can shoot a rocket into space and do any number of miraculous things, but can't create a solvent cab hailing service that pays workers living wages and basic benefits?
Yes. The rocket thing is the current apogee of a (remarkably phallic) ego war between billionaires. Most automation that would truly benefit society is boring, low-margin work. There's no massive ROI in scrubbing out a toilet or mopping a floor, so we continue to pay humans survival wages to do that kind of miserable work. For these Industry Titans, a $2.5 million hypercar just doesn't do it anymore. Robert Mercer's 200-foot, 4-story yacht with an elevator is okay, but Elon Musk's rocket shooting other people off to die on Mars (or likely partway) is a real dominance display.
Not exactly a Musk fan but I think that he genuinely believes in his Mars back-up plan. Whether or not it is realistic, feasible at all or just dreaming is another matter but I don't think he's faking it or simply doing it because he's in a pissing match. He'd do it anyway.
> Am I honestly to believe the tech industry can shoot a rocket into space and do any number of miraculous things, but can't create a solvent cab hailing service that pays workers living wages and basic benefits?
Yes, one is a technical problem, the other is a political problem. The first one we just solve by being smarter, the second one...has anyone ever successfully managed to treat private drivers as employees rather than independents?
In my opinion, basic benefits should be provided to all citizens, not just the ones with the correct employment status. Note that in Canada, it's already like this, so this isn't what we are arguing about in this context. Contracting work is much easier to stomach in Canada because retirement and health is provided by the state rather than the company (and if the USA did the same thing, it would really make labor markets much more liquid).
At the end of the day, might as well turn this into a technical problem by getting rid of the driver...oh.
If I staff my grocery store with contractors, can I claim a $30,000/contractor tax exemption too?
The intent of the law is pretty clear - serious businesses (That do more then $30,000/year in sales) are expected to pay taxes. Small ones are not - because of the small amount of tax revenue, and the high burden of compliance for individuals.
The cost of compliance for Uber is trivial. It's a bloody app, for Pete's sakes.
The Canadian Revenue Agency seems to think that I should not do that. They also seem to think that traditional taxi companies are also not eligible for this exemption.
Source on the CRA not allowing cabbies to be contractors? Because as far as I know they almost universally are. Either to the owner of the cab they drive or to the dispatcher.
If cabbies are contractors, there is still the question of who handles the rider's money.
I'm a software development contractor myself. But I don't handle the revenue of the company or companies I work for, from their customers. So the GST on that revenue is none of my business at all.
Similarly, a cab company could operate such that cabbies are contractors, but the company collects the fares, and then pays the cabbies out of that under whatever compensation terms are between the cabbies and the company.
In that case, since the company is not a small operator meeting the 30K-and-under rules, it has to collect and remit GST.
Some of the drivers might meet the rule themselves. They bill the company with their invoices and do their own GST accounting. Those that work a lot charge the GST. Some that work only little can get away without it. Either way, that makes no difference to the cab company. When that company is charged GST by a contractor, it can probably subtract that from the GST it collects and remits as a "GST input credit". When it isn't charged GST, it doesn't subtract.
Either way, the company can get the contractors "GST free". This is fair when we consider that a company with permanent employees also gets them "GST free".
The "GST cheating" in Uber is probably that the drivers themselves are not just considered contractors, but entire one-person transportation businesses which collect revenue directly from the riders. Effectively, each Uber driver is an entire one-person cab company operating one cab. Uber is then their supplier: they pay something to Uber for the services of being in the Uber network.
If there are large numbers of part-time Uber drivers that meet the 30K exemption, then that's a big loss of potential GST revenue to CCRA, compared to if those drivers were contractors who get paid by a cab company that itself collects fares with GST (even with the input credits they may get). When a driver meets the exemption, the CCRA gets no GST whatsoever from that piece of the pie: not even the difference between GST on some sales, and input credits with respect to the driver associated with those sales
Taxi drivers (at least in many places,) must use taxi company provided credit card machines and taxi payment processors and then pay the taxi company a fee for that processing. So the taxi company gets the money first and the statement charge is "Yellow Cab" not "Ricky Smith Taxi"
I actually agree that Uber should be itemizing and charging GST in their fares. But I think that's a separate issue to whether or not drivers are considered employees (and I think the law and precedent is actually on Uber's side there, for better or worse). Regardless, as they're providing a service in Canada they should be charging GST.
It's not that CRA doesn't cabbies to be contractors, its that they require all taxi drivers to register for and collect GST/HST- taxi industry does not qualify for the sub-$30K exemption.
The reason for this was that otherwise, there were fears from full-time drivers that part-time drivers, making under $30K/year, would be favoured by customers over full-time drivers.
That is right. The law in Canada explicitly excludes taxis from the $30k exemption, and taxis must collect gst/hst on all rides, regardless of how much the taxi's sales were in a year. Uber was exploiting this rule by saying their services weren't 'taxis', and each driver was independent, and therefor that rule didn't apply to them. It's a sneaky way to charge most people 5-15% less than their taxi competition.
Right, so if you buy a book from Amazon, and then pay your credit card bill a month-something later, that means Amazon and the seller are employees of Visa. Wherever the end-user sends money is the employer; that's it.
So Etsy should be charging GST and every other marketplace app out there. Uber is a broker not a transportation company. Other than their self driving experiments, they don't operate a single car.
No, Uber is not a marketplace. Uber is a consumer product. Uber designs the product and sets prices. Driver's can't compete with each other and I can't 'shop around' on Uber to find a different deal.
If Uber switches to (self driving) cars that Uber owns itself, how does that change the sales tax model? The product is still essentially the same, the consumer still pays Uber, tax shouldn't change here. The backend shouldn't dictate whether sales tax is applicable here.
Etsy is a general marketplace and should handle sales tax/GST just like Amazon does. Which it does.
Of course Uber is a marketplace. A marketplace doesn't need the ability to set prices individually. Abiding to pricing standards are the conditions to offer your services on their particular marketplace. Don't make up rules that don't exist.
Can a building contractor wear whatever they want, like a ball cap instead of a hard hat and sneakers instead of steel toe boots?
Can a software contractor code in any programming language and on and operating system, whether or not the client uses them? Can he or she flout the HR policies, while on site?
There are regulations about what people involved in construction have to wear while they're working. It's not the contractee's sole discretion in that case. But if you're an independent building contractor and you want to come to work in sequined coveralls then sure?
A software contractor can indeed work in whatever they want, but the contract may stipulate some things about that and not doing so would be breach of contract. Obviously a contractor is bound to the terms of their contract.
In this case the analogy is the contractor using their own computer and software to manage their work process, not terms of what the work product is.
Likewise, if they're not an employee and their contract doesn't stipulate anything about behaviour on site than I would expect them to follow the law rather than policies they never agreed to... Is everyone entering a workplace subject to HR rules they've never even seen?
They already support collecting HST (drivers who make more than $30k have to). Occasionally I take a ride and see HST on the receipt, but most are dodging it.
If it quacks like a duck, it gets taxed like a duck. Uber has made a business out of exploiting legal loopholes. They know it, their users know it, the politicians know it. It's just been a race to close them. I have no sympathy for Uber in this. They obviously provide a valuable service to people, so I'm sure they'll survive. Now they'll just be competing on an even playing field.
Sure. No problem. They've used loopholes for the last 4+ years, which is fine. Given they still have a massively superior service to taxi's, now let them compete.
>Uber has made a business out of exploiting legal loopholes.
I find that kind of argumentation silly. They brought to the taxi industry, what is common in other industries, like construction, tech, etc. Stated differently, Uber has been able to provide a competitive service by legally structuring themselves in a way maximizes return for the themselves, for the driver, but still keeps costs low client due to say structuring.
They brought everything they could. I'm not criticizing them for that. Taxi companies didn't even have apps 5-10 years ago. But a ton of what they have been doing obviously goes against the spirit of the laws they're leveraging. The GST loophole is a perfect example. It's meant to allow tiny businesses to avoid the paperwork and overhead associated with collecting GST. But Uber would be doing all that overhead for their "employees", since they broker all of the fee collection. So the employees wouldn't have to bear that cost anyway. Why should they be exempt then?
I'm still not sure how that's considered a loophole. The people who work for them are in fact small business operators, and it most certainly does simplify the process for them not having to pay for GST.
Is your argument that you wish they had structured it differently so they were forced to pay more taxes? If that was the case then the drivers would be making a less, and the passengers would pay a more to cover the costs of the GST, and I don't see the point in that.
If taxi companies want to level the playing field, why don't structure themselves in more innovative ways like Uber did instead of forcing others to pay more taxes?
The GST is supposed to apply to just about everything equally, with a few exceptions. If you want consumers to pay less GST, vote for a government that will reduce it, as in 2006.
The government is doing exactly the right thing in changing the law so that irrelevant differences in corporate structure don't affect the tax paid.
> Uber has been able to provide a competitive service by legally structuring themselves in a way maximizes return for the themselves, for the driver, but still keeps costs low client due to say structuring.
In fact, they haven't. They're taking a huge loss on subsidies to the fares.
There is no such thing as a loophole. The law is the law. Isn't every tax deduction really just a loophole? It's every company's fiduciary duty to minimize expenses using any legal means at their disposal. It's idiotic to criticize a company for using the law to their advantage. There is nothing stopping a competitor from doing the exact same thing. The law applies equally to everyone. It isn't Uber's fault taxi companies have structured their businesses the way they have.
>>There is no such thing as a loophole. The law is the law. Isn't every tax deduction really just a loophole?
No. A loophole is when a given law is exploited in a way that was not intended by the people who wrote it, usually by resorting to small technicalities in the law itself, or by referring to other, related laws.
In this particular case, a law that was intended to benefit small businesses is being exploited by a mega corp. Hence, loophole.
Isn't it technically incorrect it's their fiduciary duty to minimise expenses? As long as a company has a rationale for their decision (with negative PR from tax issues being a legitimate one), there's no onus on them to hunt loopholes out.
I used to work for Landstar[0], which operates in a very similar way to Uber, but in the trucking industry. The company has been around for almost 30 years and the drivers are considered Owner-Operators[1] (i.e. contractors). I was under the impression that an Uber driver could choose not to take any given fare(just like our truckers could). There seems to be some irrationality when it comes to Uber among my fellow engineers, and I can't figure out why.
[To be clear: I've never used Uber nor would I generally consider it over my local 'trolley' in the ~35K population town in which I live.]
Not officially, but I'm sure it was happening. Each individual Landstar broker operates independently as well, so if a given driver is constantly saying no, I am certain the broker would stop calling that driver (or at least put them further down the list). It was obviously a more 'manual' and distributed process, that started in the 70's with companies like Dial-a-Truck:
These systems morphed into what is called a 'load board,' and Landstar operated what was more of a network of independent trucking brokers with their own shared/ private load board.
I think that's a somewhat fair comment, and a t0pic worthy of discussion. According to wikipedia[0],
In economics and particularly in industrial organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power.
I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no? We always tried to manage our drivers for an elastic supply of capacity (much like an ad exchange). Otherwise, we'd be overwhelmed like the under-covered transport problem in Austin during SXSW (I believe a result of the lack of Uber availability). Uber's radio adverts explicitly state that it's "drive when you want for extra money," and if that is not what they actually offer then Lyft has a huge opportunity to acquire/retain more/better drivers and maintain a rapid ability to scale for capacity.
I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US (I don't actually care if Canada bans Uber altogether, for example, I am more interested in the concepts themselves), and maybe a total rethink about how to organize labor.
I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.
The important part is this: market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost
The driver does not raise the price, Uber does. Uber has the market power here.
>I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no?
Perhaps, I should have been more direct. A contractor should be able to set and negotiate rates. If they can't do that I think they're an employee. For example, if I need to hire a general contractor for a construction job I can shop around, compare rates, pick the best one AND haggle with them if need be. If I need to hire an Uber, I have no "haggle-power" OR ability to shop around because Uber sets the rate. None of the contractors are competing against each other because Uber controls the marketplace and this is where I think the contractor designation breaks down. If you tightly control the market, the people in it are employees, if the market is more free, the people in it are probably contractors.
>I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US, and maybe a total rethink about how to organize labor. I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.
This sounds interesting but personally I'm of the mind that poor labor organization is a political problem. How would your app help workers beyond just a place to communicate?
If they were employees then Uber would also get to set their hours and they wouldn't have the option to decline any fares. They also couldn't use any other services concurrently (many drive for both Uber and Lyft at the same time).
Uber also doesn't control the market. There is also Lyft and any other competitor is welcome to start and offer better rates for the driver. Or even offer variable pricing where every driver can set their own rates and consumers can pick the lowest bidder. Drivers have the power to switch providers or use multiple simultaneously.
Uber doesn't meet its responsibilities as a direct employer because those responsibilities would increase their costs, like scheduling drivers for shifts. And Uber has tried in the past to prevent its drivers from working for competitors. They pick and choose, oh our drivers are independent contractors but we're also going to just take their individual tax exemptions and apply them to ourself. Come on...
Just because Uber doesn't adhere to our common social contract doesn't mean they don't have to. Unethical behavior is not justification for that same behavior.
In the US, at least, the employee/contractor difference is based on a number of factors, but one important factor is the level of control over the person doing the work. If you're setting their working hours, or deciding which jobs they'll take or how they'll do them, or setting their wage/pricing for them, etc., those are things which point toward the "they are an employee" side of the spectrum.
But it isn't that straightforward, because your can have a 10x ninja developer who works whenever they want and picks their own projects, but is still an employee.
That's not a problem. The point in the tax code is to prevent offloading the tax liability by classifying people who are rightfully employees as contractors instead.
I'm reasonably certain the tax code has no regulation that says you must be classed a contractor if you meet certain criteria.
You're missing the main point of the argument. It's not a loophole.
There are a certain number of criteria for employees vs contractors, based on whether training/equipment is provided, price setting, ability to turn down jobs, etc etc.
If you're classified as an employee, there are a bunch of things you have to do, such as collect GST, deal with health care, sick days, paternity leave, taxes, etc.
Uber is making the case that its drivers are contractors, since they set their own hours and purchase and maintain all their own equipment. It's a plausible argument, and that's something for the courts to sort out.
Just saying that they need to collect GST because the drivers are employees is begging the question.
If Uber drivers are classified as employees, what's next? Upwork and eLance workers classified as employees?
You're missing the point, and begging the question.
If the good or service is being provided by a non-taxi contractor who makes less than 30k a year, then you don't have to collect the GST and the tax doesn't cover that.
If the good or service is being provided by Uber, a non-contractor who makes over 30k a year, then you have to pay the tax.
What we're debating here is who provides the service and their legal status.
I'm deliberately ignoring your point actually, because it's moot. The law is being changed to eliminate your first case (independent small suppliers) and declare those services to have been provided by a single entity (Uber). Both sides of your debate are now one.
There's a certain amount of circular reasoning inherent here, because a government ministry made a declaration. It's not just an objective observation of reality, it's a declaration of what that reality will be henceforth.
Was it a good decision? In my opinion yes, because it better reflects the original intent of this particular tax. Anyone trading on the brand-name of "Uber" and using Uber's infrastructure is not a small supplier (who has to build and market their own brand and build their own infrastructure). And they are clearly supplying a good or service, which was my point expressed in embryonic form above, so they can go ahead and collect the tax.
If you look at the context of the thread, the parent basically said that the old laws should have applied to Uber and that they should have been collecting taxes all along but wasn't by exploiting legal loopholes.
My point is that Uber did not have to pay taxes, and their obligation to collect taxes was unclear. Under the new law they have the collect taxes. Under the old law, it was plausible that they didn't.
The main takeaway is that most aspects of the legal system, including definitions for commonly accepted terms, are not actually clear.
Especially your argument on intents of taxes. I don't believe that brand-name and infrastructure alone make an employee out of an independent contractor. Also, based on your brandname and infrastructure arguement, should people who sell handicrafts on Etsy or Amazon be classified as employees of Amazon and be forced to pay GST on all sales?
I'm absolutely not addressing who's an employee and who's an independent contractor. That distinction isn't needed or useful. Cleanse it from your mind for a minute.
Also, they wouldn't pay GST; they would collect it from customers and pass it on to the government.
The question is what entity provides the service? In name, it's Uber. Do you take a Joe Johnson? Or do you take an Uber?
The point of contact is Uber also. You contact Uber for a ride, not Joe Johnson.
What entity sets the price? What entity collects the money? Uber.
There are some differences with Amazon and Etsy, but in general I think for this purpose if you partner up with a big company, you are not necessarily a small supplier anymore.
I'm deliberately ignoring your point actually, because it's moot. The law is being changed to eliminate your first case (independent small suppliers) and declare those services to have been provided by a single entity (Uber). Both sides of your debate are now one.
There's a certain amount of circular reasoning inherent here, because a government ministry made a declaration. It's not just an objective observation of reality, it's a declaration of what that reality will be henceforth.
Was it a good decision? In my opinion yes, because it better reflects the original intent of this particular tax. Anyone trading on the brand-name of "Uber" and using Uber's infrastructure is not a small supplier (who has to build and market their own brand and build their own infrastructure). And they are clearly supplying a good or service, which was my point expressed in embryonic form above, so they can go ahead and collect the tax.
OK, lets take as granted that the service is actually being provided by the drivers and not Uber, who is just acting as a facilitator of the payment. I would still argue that they should have owed taxes all along, because even in that case they are providing a service. It's just that the service they are actually providing is to the drivers -- matchmaking and payment collection. So the cut they take from the drivers should have been taxed all along.
The verbiage says the GST applies to goods and services bought in Canada. Also there's some sort of credit you can deduct, which bears further looking into, based on the goods and services you consume and pay GST on.
Basically, the taxation law is unclear, because you could easily argue that the service is purchased in the United States, where the Uber servers and the internet connections are. In that case, we're talking about Uber not really being a Canadian company, just that it has subcontractors working in Canada, making it exempt from taxes.
It seems like a lot of people have already decided whether or not Uber should be paying taxes, and now are retroactively applying logic to justify their original decision.
> ... you could easily argue that the service is purchased in the United States...
I could support that view, as long as they then pay taxes on that income in the US. I don't personally like the idea of shifting the money like that; I think eliminating such tactics would do a lot to fix tax havens. But at the same time I also recognize it as a pretty common and typically legal tactic for tax purposes.
The EU, for instance, closed that hole with the law that VAT taxes will be paid based on the customer's location. If such a law existed in Canada, then Uber wouldn't be able to argue that the purchase was made in the US.
> It seems like a lot of people have already decided whether or not Uber should be paying taxes, and now are retroactively applying logic to justify their original decision.
I agree, though I hope you weren't applying that to me. I was taking Uber's view as a given, but to me it still seemed that taxes would be owed for services rendered. Just that it would be services rendered to the drivers, not to the riders.
I download the Uber app, Uber finds me a ride, Uber sets the price, Uber charges me, and I pay Uber. Uber should be collecting GST/sales tax. I don't understand how else you could look at it!
Uber is essentially doing the same thing here in Australia and the courts are getting involved to make a ruling.
This is, IMO, the best way of looking at it. Whether or not Uber's drivers are employees is a completely separate matter and your point stands regardless.
The consumer is paying Uber. Whether Uber uses employees, contractors, clockwork automatons or aliens to provide their service is irrelevant.
It's a little different in Australia. The GST registration threshold is $75,000, but there is a specific carve out for taxis that forces registration/collection of GST for taxis regardless of turnover. The ATO (and now the Federal Court) aren't challenging the contractor/employee position of Uber - rather just that the individual drivers should be collecting and remitting GST on their fares.
The same thing applies to Manpower or any temp agency.
"I call manpower, manpower sets the price, manpower charges me, and I pay manpower!"
Except in that case temp agencies are clearly employing contractors, and thus don't have to pay GST.
Not everything is black and white. If they were, the government would easily have been able to block their actions. Right now they're trying to figure out what's going on and charge them appropriately.
> because we can't have "hobby" businesses causing discomfort to the well connected.
When this sentence is used by the well-connected elite of the best-funded region in the world, somewhere, the world's tiniest orchestra plays a sad tune on the world's tiniest instruments.
If you say you'll build me a website for $100, and I in turn contract that out to some guy in India, I'm still required to charge you $100 + $5 GST. The fact that I didn't use an employee to provide the service is of no issue.
It's right to close the loophole that really should never have existed in the first place, if not for industry lobbyists.
Uber drivers are absolutely employees. They might claim that they are independent contractors, but they are not independent contractors. The law doesn't just say 'you can decide that your employees are contractors if you want to'.
Uber is like a builder who hires contractors. The builder's revenue is >30 k CAD therefore they need to collect and remit GST.
If some of the contractors were to make less than 30 k per year, then they don't need to charge GST, regardless of who the builder is or the size of the projects they work on.
The "end user", the person paying for the house, deals with the builder, hence pays GST.
Ok, you can fault Uber for TONs of things. Moral, financial, ethical, political, legal, but one thing they did indeed do is provide "actual productivity improvements that make lives better".
I am an Uber/Lyft user and my life has been drastically improved!
Yes, in fact that is how it works. If multiple independent contractors work for some firm, they each get their 30,000 exemption (if eligible) as individual sole proprietors of their individual businesses. They have their own business numbers and GST accounts which are considered individually.
Contractors are considered employees in some ways and not in others. This is mainly under labor ("labour", here in Canada) law which is there to protect workers from being exploited by being reclassified as contractors. Like you can't ask people to work in shit conditions just because they are contractors, and such, or deny them a lunch break.
The firm still collects GST though. It just doesn't need to pay GST to it's contractors. In practice, the firms net finance shouldn't be different regardless of whether they have employees or exempt contractors.
Consumers contract with Uber, and pay Uber. So from what I can see, Uber should be collecting, for itself.
Except for the fact that the GST gets remitted to the government, instead of to Uber. Your suggesting is an 5-17% reduction in margin, dependent on province.
Either way, collecting GST on a sale is the norm in Canada, regardless of what happens on the back end.
I don't think you understand how this works. I can charge you $10 for a candy bar with GST included and make $.95, or I can charge $10 + 5 cents gst and make $10.
It's not at all the same thing as you previously suggested.
The entire point of this conversation here is that $10 + 5 cents gst is a price increase if you weren't bothering to charge a tax at all.
One interesting note about the press release to the Canadian newswire service, it highlights that Uber was confounded by Canadian Garret Camp.
This is set to go live on July 1st so I guess you can watch the data from that point on to see if it has any effect.
> The budget statement estimates the change will raise C$3 million in new revenue in the 2017 budget year, rising to C$5 million in the next few years.
So this isn't really about raising money as $3 million is figuratively a rounding error.
it highlights that Uber was confounded by Canadian Garret Camp
s/confounded/co-founded/cg
Sorry for the nit-pick, but in this case the word confounded had me genuinely confused about what this special interest group, Canadian Garret Camp, is (are they angel investors? some sort of VC incubator? a front-group for taxi companies?), and why they were lobbying for removing Uber's GST exemption.
The real issue here should be the abuse of the small provider provision 'hobby' tax code exemption for businesses netting <$30K that provide ride sharing.
Uber should fail on both of those counts, but instead the law is changing to end that exemption. This appears unfortunate to me as we could use continued innovation in the ride sharing space.
<parody>The new national budget unveiled Wednesday by Canadian Prime Minister Justin Trudeau's Liberal government took aim at document processor providers such as Microsoft Word [MSFT], to force them to collect the goods and services tax (GST) on every document created using their software. Trudeau stated, "(The Royal) we are quite disappointed that many attorneys and other value-added providers within Canada are creating documents that result in multi-million (Canadian, but still...) dollar settlements without a tax being gathered on the value those documents add to the case. Why, individual attorneys can download this software right from Microsoft, create documents worth a fortune to their clients, and not pay us a (Canadian, but still...) cent for the use of that software! Each attorney and complainant ends up having to pay us directly, and that creates awareness and complaints from taxpayers - tres horrible, I say.".</parody>
Uber is essentially just a matcher and payment processor that takes a cut, they don't own vehicles or employ drivers - will they only have to pay taxes on their cut?
>Uber is essentially just a matcher and payment processor that takes a cut, they don't own vehicles or employ drivers
That's the story their PR spins. Luckily they don't make the laws.
You think this idea of, "He's not my employee, he's a contractor!" as a way to avoid employer obligations is new? That's a laugh, and it's the reason these laws exist.
But it's the truth - those Uber drivers don't get guaranteed work, they don't get hours, they don't get salary. Instead they find contracts via Uber and they keep their portion of the earnings. Just because Uber takes the payment makes them an employer? If Uber had the drivers take the payment and pay them out later would they not be an employer anymore?
Seems like the exact definition of a contractor to me. I don't know how else you could define it really.
Are uber drivers allowed to be Lyft Drivers or regular Taxi drivers? If so, you have a good argument that they are not employees. If not, they will be seen by the CRA as employees, regardless of anything else in place.
If they are not employees, drivers are obliged to collect GST from Uber for their services if they earn more than $30K. If Uber re-sells that service, they are also obliged to collect GST from the end user. They can claim an input tax credit on the contractor's GST to offset. This is normal business operation in Canada, and one of the main reasons the HST was so popular - it moved all the multiple people charging and remitting taxes to one spot - the end sale.
If Uber's contractors are determined to be employees, that's a major issue for them, because at that point they have a ton of CPP and EI to pay that they have not been doing.
Really, they don't have much of an argument here either way. There is no real reason they should be tax exempt.
The consumer pays Uber. That is the point of sale. That is where the sales tax is collected. This isn't rocket science.
To your - bad - analogy: If MS was selling templates created in word by you to a marketplace, you can bet that GST would be paid on them by the consumer to MS.
Yup. And if you, the template provider, had a GST number (you are a business or have sales over $30k), you would also be charging Microsoft the GST for the sale. It is not a problem for MS since they would just claim it back as an input tax credit and it would be net zero for them.
Consumer pays GST to MS. MS pays GST to a GST collecting template provider. MS and template provider both pay GST to government, but MS gets an input tax credit for GST paid to template provider so that government doesn't double dip.
This is what uber should be doing with their drivers but they prefer to have prices 5-15% lower than their competition by applying their own legal interpretation to Canada's tax laws.
This is basically what happens on the Apple App Store, except that Apple submits the GST directly to the government on the behalf of the app creator. On paper it's the same as your example, it's just the GST money never actually goes into the account of the app creator.
It's likely that Apple is just forgoing the input tax credit in this case. They remit the GST on their sale and because they aren't charged any GST by the app creator, they don't look to offset.
Now, the major issue here is that if the app creator is making $30K+, it is THEIR responsibility to charge GST, which means that if there is no mechanism to charge in addition to the price, it's automatically inclusive. The CRA doesn't care how you collect the tax you owe, they just care that you pay it.
For a vast majority of app creators, $30K probably is a target they are on the lower side of, but I'd imagine people making a living on the apple store, the GST is coming out of their revenue directly. At least, that's how CRA would look at it.
Now that being said, CRA might be treating this entire industry as an undefined gray area for the time being, particularly since they are getting the GST on the final sale by apple, but I don't think that will last long.
Instead of making it harder to be an Uber/Lyft to match Taxis, why not make it easier to be a taxi? Driving someone around shouldn't be so complicated.
Regulation, when necessary, is good... but most of what I see around taxi regulation is just money gouging on the part of the state.
Does the safety somehow diminish when you pay for the ride?
If I give you a ride to work, for free --- then give you a ride to work, but you pay me, what is the functional difference requiring more regulation on the second part?
Is your safety affected any different? Aside from the basic protections built in to any business when it comes to collecting money, etc, what extra rules need to be in place.
From a purely pragmatic standpoint, what is different about the experience that requires all the extra crap?
For example, in many cities where they were losing the legal fight, Uber offered free rides... and were legally allowed to do so, because they weren't charging the customer. Explain to me what was different in that scenario that made it any safer for the passengers?
Ok, so what laws that are in place do anything to control the speed of the driver (Aside from laws that would apply regardless of driving for fee or not)
If I give you a ride to work, for free --- then give you a ride to work, but you pay me, what is the functional difference requiring more regulation on the second part?
Is your safety affected any different? Aside from the basic protections built in to any business when it comes to collecting money, etc, what extra rules need to be in place.
In the first instance, both parties can refuse, and can drive in any way they want. One-off rides (or paying for part of the gas in a carpool) aren't much of a worry. This is basically as safe as driving yourself somewhere. Of course, they could be a really bad driver with minimal insurance, so hopefully nothing bad happens. In addition, in these situations, you are usually on a friendly basis with the person - minimally a coworker.
Your safety is different when you start to ride with someone that does it for a living. You don't know the person, so you are trusting they know what they are doing and can drive in a way that is safe for you. The more folks drive, the more likely they are to be in an accident (this is why insurance increases with your commute). Minimally, they need to know how to combat this. I'd prefer them to have a more comprehensive driving test, including things like passenger safety and minimal regulations on driving record/background check. Unlike your friend, I'm pretty sure a taxi service has to have adequate insurance in case of an accident. Many places also have policies about pricing because of shady pricing policies in the past.
While the more you drive would statistically make you more likely to get in an accident, that still doesn't affect passenger safety. You can argue that the more you drive, the safer you drive, as well. The more experience you have driving, the more inbuilt habit/reaction you have as body memory.
The more you ride would be what affected passenger safety.
"You can argue that the more you drive, the safer you drive, as well. THe more experience you have driving, the more inbuilt habit/reaction you have as body memory"
I used to think something similar, but the truth is that the problem with professional driving isn't one of experience, but things like driver fatigue [1]. All things being equal in driving skill, the "normal" driver generally drives safer than the professional.
In that document, it states over and over that the vast majority does not have a problem and is responsible.
Laws will not weed out irresponsible people.
The key points here arent that there is a potential for danger. The point is that the extra laws (which just so happen to come with a price and generate revenue for the state) don't prevent those problems.
They could pass a law requiring that drivers drive less than 40 hours a week. Does that really fix anything? Is there any way to determine that the driver who drove 10 hours this week didnt do so after staying awake for 3 days straight?
Taking someone somewhere against their will is already illegal, which of these extra laws (and taxes) prevent that?
The result would be the same in either case - the driver would be held accountable for, basically, kidnapping and extortion, and you'll be left either short more money or stranded 60 miles out of town. A regulation in place isnt going to prevent someone from doing that. Regulations would have no impact on that case.
>Taking someone somewhere against their will is already illegal, which of these extra laws (and taxes) prevent that?
For the same reason that regulations help in all sorts of areas; you pre-vet the people authorized to do the service to reduce the likelihood of this occurring. It's exactly the same as regulating doctors, lawyers, financial planners, truck drivers, teachers, daycare workers etc, etc, etc.
You cannot make it "easier enough" to satisfy Uber. New Zealand requires only that you have a P endorsement to your license to be a commercial driver. That requires a police background check and a medical certificate. Uber refuses to comply with that minimum requirement.
The NZTA are prosecuting because it turns out that, surprise surprise, Uber are hiring drivers with serious criminal records or who are medically unsafe to drive.
Why not just cut GST for everybody? Instead of taxing Uber more, tax taxis less. Drivers and Uber still pay income taxes, fuel taxes, relevant tolls right? If they want to simplify taxes -- as they claim, the best way to simplify is simply to eliminate.
Lower fares mean more revenue for drivers and Uber and thus more income taxes collected. Removing taxes from goods, means lower prices which means you sell more and then generate more tax revenue. Laffer Curve 101.
It's possible if there's significantly higher utilization to offset the decreased cost. Today a significant portion of the driver's time is waiting around doing nothing.
Companies that collect GST also get back from the government any GST they spend. So effectively they don't have to pay for GST/HST on fuel, maintenance, even a new car. Companies that don't collect GST/HST (people with sales under $30k, exempt service providers like doctors, etc...) cannot claim any input tax credit and have to pay it just like regular individuals.
What I would have preferred is that Canada removing the burden off the taxi companies and let them give competition to Uber in innovation space instead of trying to bribe politicians to act as gatekeepers.
Have you ever been to Bangkok? I can just pay $1, hop on the back of a moto idling outside the skytrain station, and off we go lanesplitting through traffic straight to my office 2km away.
It's amazing and would be so illegal on so many levels in Canada (where I spend $1000/mo on transportation).
I don't follow. It only cost $2 a day to take the moto taxi between the office and the Skytrain. What kind of moto can you buy for $60-$120? And that's not taking into consideration parking requirements and the extra time it takes to drive all the way from home instead of doing most of the distance on the Skytrain.
The Canadian government realized it could increase taxes by appealing to moral outrage, with terms lime "tax advantage" and "loophole". End the tax advantage by lowering taxes and reducing the size of government? Out of the question.
I didn't claim it does. Reducing the size of government decreases the amount of money the government needs to operate without incurring additional debt. If the government were less expensive to run, officials wouldn't need to invent new ways of taking money from the people.
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[ 3.0 ms ] story [ 296 ms ] threadThey don't even always have a price advantage anymore, especially if there's a surge. I needed a cab from Chicago Midway to my hotel last night, Uber's upfront price was $48 (and an eight minute wait), a regular taxi was $40 (including 15% tip) and no wait. I took the latter.
1) Their app 2) The reliability of getting car with them vs. waiting for a cab. 3) Their vehicles are much, much, much nicer than cabs in my area. 4) The purchase experience.
Have you ever asked yourself how they do that? It's not like taxi drivers are fabulously wealthy.
Like you said, cab drivers (and probably cab company owners) aren't exactly fatcats. Meanwhile what's Travis Kalanick's net worth? How much are they paying top engineers at Uber?
Don't get me wrong, there's definitely corruption and protectionism in the existing taxi industry, but I fail to see how the low $5-7 fares are anywhere near sustainable. Is the revenue from surge pricing enough to offset the current discount?
Aren't cab drivers in major cities dealing with the purchase or lease of million dollar cab medallions? I believe that could factor into higher prices for consumers.
Particularly because Uber-like apps are becoming important to public transportation infrastructure. Additionally, taxi revenue coming from tourism remains in the hands of Canadian taxi companies as opposed to Uber resulting in a net positive flow of money into the country.
http://www.itbusiness.ca/news/canadian-alternative-to-uber-l...
Sadly it doesn't address any of the problems with cabs in Toronto.
1. Cabs won't take credit cards by claiming "the machine is broken" when it's not, presumably so that they can avoid reporting tips or fees, or they might just skim your card.
2. Cabs are too expensive.
3. Cabs might not even take you if they figure the ride isn't worth it.
This app doesn't allow you to pay, so doesn't help 1. It actually make 2 worse by charging you $2 just to "hail" a cab with it. I mean, seriously? And it doesn't help with 3 either.
I find more cabs don't use that excuse now since Uber has been breathing down their necks. Also, since you mention Toronto, there's the Beck Taxi iOS app. With it you can pick the pickup location, destination, hop in the cab, and when leaving the driver declares that the trip is over which charges one's PayPal account. It's not as cheap but if someone wants to use cabs over Uber based on principle then there other convenient options.
In addition, my understanding (not a tax/law person) is that the 30k$ would be for the whole fare, not the driver's cut.
GST rate is 5%... But provincial sales tax could apply, at least in provinces where there is HST (Harmonized Sales Tax, administered by fed gov, divided with province.) HST varies from 13% to 15%. I wonder if we'll see provinces going after the drivers for back taxes. Revenue Quebec is notoriously aggressive in going after people for sales tax.
Sounds like Uber needs to update their app.
> I wonder if we'll see provinces going after the drivers for back taxes.
I'm sure Uber will do the responsible thing, stand by its drivers, and make them whole in the case that they are billed for back-taxes.
The purpose of the exemption was never to let a mega-corporation take the exemption of each employee, multiply it by the number of employees, and pretend that they don't need to pay tax.
What next? A grocery store taking the $30,000 exemption for each employee working for it? A law firm taking a $30,000 exemption for each legal aide working on a case?
This is Canada. I'm sure that's how Uber would like to see it but not everybody agrees:
http://business.financialpost.com/news/transportation/uber-d...
It would wreck the cab industry if dispatch companies (to which cabs are exclusively tied) had to make all their drivers employees.
Besides, even without innovation, cabs/ubers can just cost more, or cab company owners (I don't mean the drivers) can just make less profit.
edit: I also think that welfare and healthcare should come from the government and not from companies, but I just don't understand how being profitable enough to pay people decent wages is a political problem at all. Nothing political about this - it just requires making a simple decision to divert some of your profit into something other than shareholder pockets.
Yes. The rocket thing is the current apogee of a (remarkably phallic) ego war between billionaires. Most automation that would truly benefit society is boring, low-margin work. There's no massive ROI in scrubbing out a toilet or mopping a floor, so we continue to pay humans survival wages to do that kind of miserable work. For these Industry Titans, a $2.5 million hypercar just doesn't do it anymore. Robert Mercer's 200-foot, 4-story yacht with an elevator is okay, but Elon Musk's rocket shooting other people off to die on Mars (or likely partway) is a real dominance display.
Yes, one is a technical problem, the other is a political problem. The first one we just solve by being smarter, the second one...has anyone ever successfully managed to treat private drivers as employees rather than independents?
In my opinion, basic benefits should be provided to all citizens, not just the ones with the correct employment status. Note that in Canada, it's already like this, so this isn't what we are arguing about in this context. Contracting work is much easier to stomach in Canada because retirement and health is provided by the state rather than the company (and if the USA did the same thing, it would really make labor markets much more liquid).
At the end of the day, might as well turn this into a technical problem by getting rid of the driver...oh.
https://qz.com/808484/new-york-state-has-found-two-uber-driv...
https://www.nytimes.com/2015/06/18/business/uber-contests-ca...
http://business.financialpost.com/news/transportation/uber-d...
https://arstechnica.com/tech-policy/2016/10/uber-drivers-emp...
The intent of the law is pretty clear - serious businesses (That do more then $30,000/year in sales) are expected to pay taxes. Small ones are not - because of the small amount of tax revenue, and the high burden of compliance for individuals.
The cost of compliance for Uber is trivial. It's a bloody app, for Pete's sakes.
I'm a software development contractor myself. But I don't handle the revenue of the company or companies I work for, from their customers. So the GST on that revenue is none of my business at all.
Similarly, a cab company could operate such that cabbies are contractors, but the company collects the fares, and then pays the cabbies out of that under whatever compensation terms are between the cabbies and the company.
In that case, since the company is not a small operator meeting the 30K-and-under rules, it has to collect and remit GST.
Some of the drivers might meet the rule themselves. They bill the company with their invoices and do their own GST accounting. Those that work a lot charge the GST. Some that work only little can get away without it. Either way, that makes no difference to the cab company. When that company is charged GST by a contractor, it can probably subtract that from the GST it collects and remits as a "GST input credit". When it isn't charged GST, it doesn't subtract.
Either way, the company can get the contractors "GST free". This is fair when we consider that a company with permanent employees also gets them "GST free".
The "GST cheating" in Uber is probably that the drivers themselves are not just considered contractors, but entire one-person transportation businesses which collect revenue directly from the riders. Effectively, each Uber driver is an entire one-person cab company operating one cab. Uber is then their supplier: they pay something to Uber for the services of being in the Uber network.
If there are large numbers of part-time Uber drivers that meet the 30K exemption, then that's a big loss of potential GST revenue to CCRA, compared to if those drivers were contractors who get paid by a cab company that itself collects fares with GST (even with the input credits they may get). When a driver meets the exemption, the CCRA gets no GST whatsoever from that piece of the pie: not even the difference between GST on some sales, and input credits with respect to the driver associated with those sales
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/txlmsn/menu-e...
I do think it was pretty unclear though if you go up the reply chain. :)
In turn, drivers who earn > $30k should provide their HST number to Uber, and Uber should be billed HST in remittances.
In turn, drivers can write off HST paid on all business-related expenses.
Yay, Value Added Taxes.
> When you buy a book from a seller on Amazon, who sets the price?
The answer is that the seller always sets the price. Sometimes the seller is Amazon itself, and other times it's not.
Consumer buy ride services from Uber.
If Uber switches to (self driving) cars that Uber owns itself, how does that change the sales tax model? The product is still essentially the same, the consumer still pays Uber, tax shouldn't change here. The backend shouldn't dictate whether sales tax is applicable here.
Etsy is a general marketplace and should handle sales tax/GST just like Amazon does. Which it does.
The concept of Uber being a marketplace is utterly ridiculous.
Can a software contractor code in any programming language and on and operating system, whether or not the client uses them? Can he or she flout the HR policies, while on site?
A software contractor can indeed work in whatever they want, but the contract may stipulate some things about that and not doing so would be breach of contract. Obviously a contractor is bound to the terms of their contract.
In this case the analogy is the contractor using their own computer and software to manage their work process, not terms of what the work product is.
Likewise, if they're not an employee and their contract doesn't stipulate anything about behaviour on site than I would expect them to follow the law rather than policies they never agreed to... Is everyone entering a workplace subject to HR rules they've never even seen?
For reference, the things that I was vaguely referring to are described in detail here: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html#facto...
I find that kind of argumentation silly. They brought to the taxi industry, what is common in other industries, like construction, tech, etc. Stated differently, Uber has been able to provide a competitive service by legally structuring themselves in a way maximizes return for the themselves, for the driver, but still keeps costs low client due to say structuring.
Is your argument that you wish they had structured it differently so they were forced to pay more taxes? If that was the case then the drivers would be making a less, and the passengers would pay a more to cover the costs of the GST, and I don't see the point in that.
If taxi companies want to level the playing field, why don't structure themselves in more innovative ways like Uber did instead of forcing others to pay more taxes?
The government is doing exactly the right thing in changing the law so that irrelevant differences in corporate structure don't affect the tax paid.
In fact, they haven't. They're taking a huge loss on subsidies to the fares.
No. A loophole is when a given law is exploited in a way that was not intended by the people who wrote it, usually by resorting to small technicalities in the law itself, or by referring to other, related laws.
In this particular case, a law that was intended to benefit small businesses is being exploited by a mega corp. Hence, loophole.
[To be clear: I've never used Uber nor would I generally consider it over my local 'trolley' in the ~35K population town in which I live.]
[0]https://en.wikipedia.org/wiki/Landstar_System
[1]https://en.wikipedia.org/wiki/Owner-operator
https://en.wikipedia.org/wiki/Dial-a-truck
These systems morphed into what is called a 'load board,' and Landstar operated what was more of a network of independent trucking brokers with their own shared/ private load board.
In economics and particularly in industrial organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power.
I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no? We always tried to manage our drivers for an elastic supply of capacity (much like an ad exchange). Otherwise, we'd be overwhelmed like the under-covered transport problem in Austin during SXSW (I believe a result of the lack of Uber availability). Uber's radio adverts explicitly state that it's "drive when you want for extra money," and if that is not what they actually offer then Lyft has a huge opportunity to acquire/retain more/better drivers and maintain a rapid ability to scale for capacity.
I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US (I don't actually care if Canada bans Uber altogether, for example, I am more interested in the concepts themselves), and maybe a total rethink about how to organize labor.
I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.
[0]https://en.wikipedia.org/wiki/Market_power
The driver does not raise the price, Uber does. Uber has the market power here.
>I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no?
Perhaps, I should have been more direct. A contractor should be able to set and negotiate rates. If they can't do that I think they're an employee. For example, if I need to hire a general contractor for a construction job I can shop around, compare rates, pick the best one AND haggle with them if need be. If I need to hire an Uber, I have no "haggle-power" OR ability to shop around because Uber sets the rate. None of the contractors are competing against each other because Uber controls the marketplace and this is where I think the contractor designation breaks down. If you tightly control the market, the people in it are employees, if the market is more free, the people in it are probably contractors.
>I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US, and maybe a total rethink about how to organize labor. I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.
This sounds interesting but personally I'm of the mind that poor labor organization is a political problem. How would your app help workers beyond just a place to communicate?
Uber also doesn't control the market. There is also Lyft and any other competitor is welcome to start and offer better rates for the driver. Or even offer variable pricing where every driver can set their own rates and consumers can pick the lowest bidder. Drivers have the power to switch providers or use multiple simultaneously.
Just because Uber doesn't adhere to our common social contract doesn't mean they don't have to. Unethical behavior is not justification for that same behavior.
I'm reasonably certain the tax code has no regulation that says you must be classed a contractor if you meet certain criteria.
There are a certain number of criteria for employees vs contractors, based on whether training/equipment is provided, price setting, ability to turn down jobs, etc etc.
If you're classified as an employee, there are a bunch of things you have to do, such as collect GST, deal with health care, sick days, paternity leave, taxes, etc.
Uber is making the case that its drivers are contractors, since they set their own hours and purchase and maintain all their own equipment. It's a plausible argument, and that's something for the courts to sort out.
Just saying that they need to collect GST because the drivers are employees is begging the question.
If Uber drivers are classified as employees, what's next? Upwork and eLance workers classified as employees?
If the good or service is being provided by a non-taxi contractor who makes less than 30k a year, then you don't have to collect the GST and the tax doesn't cover that.
If the good or service is being provided by Uber, a non-contractor who makes over 30k a year, then you have to pay the tax.
What we're debating here is who provides the service and their legal status.
There's a certain amount of circular reasoning inherent here, because a government ministry made a declaration. It's not just an objective observation of reality, it's a declaration of what that reality will be henceforth.
Was it a good decision? In my opinion yes, because it better reflects the original intent of this particular tax. Anyone trading on the brand-name of "Uber" and using Uber's infrastructure is not a small supplier (who has to build and market their own brand and build their own infrastructure). And they are clearly supplying a good or service, which was my point expressed in embryonic form above, so they can go ahead and collect the tax.
My point is that Uber did not have to pay taxes, and their obligation to collect taxes was unclear. Under the new law they have the collect taxes. Under the old law, it was plausible that they didn't.
The main takeaway is that most aspects of the legal system, including definitions for commonly accepted terms, are not actually clear.
Especially your argument on intents of taxes. I don't believe that brand-name and infrastructure alone make an employee out of an independent contractor. Also, based on your brandname and infrastructure arguement, should people who sell handicrafts on Etsy or Amazon be classified as employees of Amazon and be forced to pay GST on all sales?
Also, they wouldn't pay GST; they would collect it from customers and pass it on to the government.
The question is what entity provides the service? In name, it's Uber. Do you take a Joe Johnson? Or do you take an Uber?
The point of contact is Uber also. You contact Uber for a ride, not Joe Johnson.
What entity sets the price? What entity collects the money? Uber.
There are some differences with Amazon and Etsy, but in general I think for this purpose if you partner up with a big company, you are not necessarily a small supplier anymore.
There's a certain amount of circular reasoning inherent here, because a government ministry made a declaration. It's not just an objective observation of reality, it's a declaration of what that reality will be henceforth.
Was it a good decision? In my opinion yes, because it better reflects the original intent of this particular tax. Anyone trading on the brand-name of "Uber" and using Uber's infrastructure is not a small supplier (who has to build and market their own brand and build their own infrastructure). And they are clearly supplying a good or service, which was my point expressed in embryonic form above, so they can go ahead and collect the tax.
Basically, the taxation law is unclear, because you could easily argue that the service is purchased in the United States, where the Uber servers and the internet connections are. In that case, we're talking about Uber not really being a Canadian company, just that it has subcontractors working in Canada, making it exempt from taxes.
It seems like a lot of people have already decided whether or not Uber should be paying taxes, and now are retroactively applying logic to justify their original decision.
I could support that view, as long as they then pay taxes on that income in the US. I don't personally like the idea of shifting the money like that; I think eliminating such tactics would do a lot to fix tax havens. But at the same time I also recognize it as a pretty common and typically legal tactic for tax purposes.
The EU, for instance, closed that hole with the law that VAT taxes will be paid based on the customer's location. If such a law existed in Canada, then Uber wouldn't be able to argue that the purchase was made in the US.
> It seems like a lot of people have already decided whether or not Uber should be paying taxes, and now are retroactively applying logic to justify their original decision.
I agree, though I hope you weren't applying that to me. I was taking Uber's view as a given, but to me it still seemed that taxes would be owed for services rendered. Just that it would be services rendered to the drivers, not to the riders.
I download the Uber app, Uber finds me a ride, Uber sets the price, Uber charges me, and I pay Uber. Uber should be collecting GST/sales tax. I don't understand how else you could look at it!
Uber is essentially doing the same thing here in Australia and the courts are getting involved to make a ruling.
The consumer is paying Uber. Whether Uber uses employees, contractors, clockwork automatons or aliens to provide their service is irrelevant.
"I call manpower, manpower sets the price, manpower charges me, and I pay manpower!"
Except in that case temp agencies are clearly employing contractors, and thus don't have to pay GST.
Not everything is black and white. If they were, the government would easily have been able to block their actions. Right now they're trying to figure out what's going on and charge them appropriately.
This is under dispute, and I think you're going to find that governments around the world disagree with you.
When this sentence is used by the well-connected elite of the best-funded region in the world, somewhere, the world's tiniest orchestra plays a sad tune on the world's tiniest instruments.
Seriously, guys ~~
If you say you'll build me a website for $100, and I in turn contract that out to some guy in India, I'm still required to charge you $100 + $5 GST. The fact that I didn't use an employee to provide the service is of no issue.
It's right to close the loophole that really should never have existed in the first place, if not for industry lobbyists.
Uber is like a builder who hires contractors. The builder's revenue is >30 k CAD therefore they need to collect and remit GST.
If some of the contractors were to make less than 30 k per year, then they don't need to charge GST, regardless of who the builder is or the size of the projects they work on.
The "end user", the person paying for the house, deals with the builder, hence pays GST.
I am an Uber/Lyft user and my life has been drastically improved!
Contractors are considered employees in some ways and not in others. This is mainly under labor ("labour", here in Canada) law which is there to protect workers from being exploited by being reclassified as contractors. Like you can't ask people to work in shit conditions just because they are contractors, and such, or deny them a lunch break.
Consumers contract with Uber, and pay Uber. So from what I can see, Uber should be collecting, for itself.
Either way, collecting GST on a sale is the norm in Canada, regardless of what happens on the back end.
> So from what I can see, Uber should be collecting, for itself.
My comment is not about remitting, it's about collection. Jesus.
It's not at all the same thing as you previously suggested.
The entire point of this conversation here is that $10 + 5 cents gst is a price increase if you weren't bothering to charge a tax at all.
By "collecting, for itself" I meant "for itself as the seller" rather than "collecting on behalf of its contractors"
http://www.newswire.ca/news-releases/statement-from-uber-can...
One interesting note about the press release to the Canadian newswire service, it highlights that Uber was confounded by Canadian Garret Camp.
This is set to go live on July 1st so I guess you can watch the data from that point on to see if it has any effect.
> The budget statement estimates the change will raise C$3 million in new revenue in the 2017 budget year, rising to C$5 million in the next few years.
So this isn't really about raising money as $3 million is figuratively a rounding error.
https://www.crunchbase.com/person/oscar-salazar#/entity
s/confounded/co-founded/cg
Sorry for the nit-pick, but in this case the word confounded had me genuinely confused about what this special interest group, Canadian Garret Camp, is (are they angel investors? some sort of VC incubator? a front-group for taxi companies?), and why they were lobbying for removing Uber's GST exemption.
Uber should fail on both of those counts, but instead the law is changing to end that exemption. This appears unfortunate to me as we could use continued innovation in the ride sharing space.
That's the story their PR spins. Luckily they don't make the laws.
You think this idea of, "He's not my employee, he's a contractor!" as a way to avoid employer obligations is new? That's a laugh, and it's the reason these laws exist.
Seems like the exact definition of a contractor to me. I don't know how else you could define it really.
If they are not employees, drivers are obliged to collect GST from Uber for their services if they earn more than $30K. If Uber re-sells that service, they are also obliged to collect GST from the end user. They can claim an input tax credit on the contractor's GST to offset. This is normal business operation in Canada, and one of the main reasons the HST was so popular - it moved all the multiple people charging and remitting taxes to one spot - the end sale.
If Uber's contractors are determined to be employees, that's a major issue for them, because at that point they have a ton of CPP and EI to pay that they have not been doing.
Really, they don't have much of an argument here either way. There is no real reason they should be tax exempt.
Who does?
And not all employees of every company are salaried. Some work on commission or other models.
To your - bad - analogy: If MS was selling templates created in word by you to a marketplace, you can bet that GST would be paid on them by the consumer to MS.
Consumer pays GST to MS. MS pays GST to a GST collecting template provider. MS and template provider both pay GST to government, but MS gets an input tax credit for GST paid to template provider so that government doesn't double dip.
This is what uber should be doing with their drivers but they prefer to have prices 5-15% lower than their competition by applying their own legal interpretation to Canada's tax laws.
Now, the major issue here is that if the app creator is making $30K+, it is THEIR responsibility to charge GST, which means that if there is no mechanism to charge in addition to the price, it's automatically inclusive. The CRA doesn't care how you collect the tax you owe, they just care that you pay it.
For a vast majority of app creators, $30K probably is a target they are on the lower side of, but I'd imagine people making a living on the apple store, the GST is coming out of their revenue directly. At least, that's how CRA would look at it.
Now that being said, CRA might be treating this entire industry as an undefined gray area for the time being, particularly since they are getting the GST on the final sale by apple, but I don't think that will last long.
Instead of making it harder to be an Uber/Lyft to match Taxis, why not make it easier to be a taxi? Driving someone around shouldn't be so complicated.
Regulation, when necessary, is good... but most of what I see around taxi regulation is just money gouging on the part of the state.
Personal safety gets involved, big time, when driving someone around.
If I give you a ride to work, for free --- then give you a ride to work, but you pay me, what is the functional difference requiring more regulation on the second part?
Is your safety affected any different? Aside from the basic protections built in to any business when it comes to collecting money, etc, what extra rules need to be in place.
From a purely pragmatic standpoint, what is different about the experience that requires all the extra crap?
For example, in many cities where they were losing the legal fight, Uber offered free rides... and were legally allowed to do so, because they weren't charging the customer. Explain to me what was different in that scenario that made it any safer for the passengers?
In the first instance, both parties can refuse, and can drive in any way they want. One-off rides (or paying for part of the gas in a carpool) aren't much of a worry. This is basically as safe as driving yourself somewhere. Of course, they could be a really bad driver with minimal insurance, so hopefully nothing bad happens. In addition, in these situations, you are usually on a friendly basis with the person - minimally a coworker.
Your safety is different when you start to ride with someone that does it for a living. You don't know the person, so you are trusting they know what they are doing and can drive in a way that is safe for you. The more folks drive, the more likely they are to be in an accident (this is why insurance increases with your commute). Minimally, they need to know how to combat this. I'd prefer them to have a more comprehensive driving test, including things like passenger safety and minimal regulations on driving record/background check. Unlike your friend, I'm pretty sure a taxi service has to have adequate insurance in case of an accident. Many places also have policies about pricing because of shady pricing policies in the past.
The more you ride would be what affected passenger safety.
I used to think something similar, but the truth is that the problem with professional driving isn't one of experience, but things like driver fatigue [1]. All things being equal in driving skill, the "normal" driver generally drives safer than the professional.
[1]https://www.transportation.gov/fastlane/why-we-care-about-tr...
Laws will not weed out irresponsible people.
The key points here arent that there is a potential for danger. The point is that the extra laws (which just so happen to come with a price and generate revenue for the state) don't prevent those problems.
They could pass a law requiring that drivers drive less than 40 hours a week. Does that really fix anything? Is there any way to determine that the driver who drove 10 hours this week didnt do so after staying awake for 3 days straight?
Until someone gets driven 60 miles out of town on the way to the airport and left there unless they have a "special" fee...
It's almost as if these regulations were put in place for a reason.
Taking someone somewhere against their will is already illegal, which of these extra laws (and taxes) prevent that?
The result would be the same in either case - the driver would be held accountable for, basically, kidnapping and extortion, and you'll be left either short more money or stranded 60 miles out of town. A regulation in place isnt going to prevent someone from doing that. Regulations would have no impact on that case.
For the same reason that regulations help in all sorts of areas; you pre-vet the people authorized to do the service to reduce the likelihood of this occurring. It's exactly the same as regulating doctors, lawyers, financial planners, truck drivers, teachers, daycare workers etc, etc, etc.
The NZTA are prosecuting because it turns out that, surprise surprise, Uber are hiring drivers with serious criminal records or who are medically unsafe to drive.
Lower fares mean more revenue for drivers and Uber and thus more income taxes collected. Removing taxes from goods, means lower prices which means you sell more and then generate more tax revenue. Laffer Curve 101.
Because consumption taxes are the most efficient form of taxation. You want a private chauffeur? Pay up.
>Lower fares mean more revenue for drivers and Uber
Huh? Only if the driver is working a lot harder.
It's amazing and would be so illegal on so many levels in Canada (where I spend $1000/mo on transportation).
https://news.ycombinator.com/item?id=13921048
The Canadian government realized it could increase taxes by appealing to moral outrage, with terms lime "tax advantage" and "loophole". End the tax advantage by lowering taxes and reducing the size of government? Out of the question.
https://news.fastcompany.com/investors-are-paying-2-billion-...