ALBANY -- In New York City, ride-hailing companies are required to charge an 8.75 percent sales tax on each fare. But proposals to bring the services to upstate would not include sales tax.
That might be changing.
Assembly Democrats are considering legislation that would require fares to pay the local sales-tax rate, typically 8 percent, as a way to provide additional revenue to municipalities.
"The proposal we’re discussing includes sales tax across the board for all ride sharing," Assembly Insurance Committee chairman Kevin Cahill, D-Kingston, who is negotiating the upstate ride-hailing bill, said Wednesday.
"It would be distributed in the same way as sales tax: So the state would get its share, and the locals would get their local share."
The fight over how to split the tax revenue from allowing companies like Uber and Lyft to operate legally outside New York City could be one of the key sticking points between lawmakers and Gov. Andrew Cuomo during budget negotiations this month.
The sides are hoping to strike deal as part of the state budget for the fiscal year that starts April 1.
To tax or not
Currently, the ride-hailing companies largely do not operate outside the city because there is no statewide law governing their operations.
An agreement on a law faltered last year, and now Cuomo and legislative leaders are back at it again.
In January, the Democratic governor pledged to legalize ride-hailing upstate, proposing a 5.5 percent tax on Uber and Lyft trips, but no sales tax.
His plan would send the majority of the tax to the state, with about a fourth going to local transportation systems.
But Cuomo's plan would be unlike sales tax in New York -- which is typically 4 percent for the state and 4 percent for the county.
Local governments have raised concerns about getting a mere sliver of the revenue, which under Cuomo's plan would generate about $16 million this year and $32 million in subsequent years.
Charging sales tax on ride-hailing trips "should be on the table for discussion. Property taxpayers cannot afford to operate their government anymore: It has been hijacked by state policies," said Stephen Acquario, executive director of the state Association of Counties.
Assembly Speaker Carl Heastie, D-Bronx, said his conference is still discussing how to tax Uber and Lyft trips.
"We're still trying to figure out where we want to go," Heastie said. "We're discussing how to do the distribution. We haven't gotten to that final point in our proposal."
Currently, taxi rides outside New York City are not subject to sales tax, but limousine trips are.
So Cahill said Democrats who control the Assembly are considering the same tax structure that the state has for limousine rides.
Each county has its own sales-tax rate, but most are 4 percent. Cahill said the Assembly proposal would levy the tax rate based on the origin of the trip.
"We want to be as consistent with how it’s regulated in New York City as possible, because we don’t want to create a border war between the city and the counties surrounding the city," Cahill told the USA Today Network's Albany Bureau.
"We also believe the locals have a right to generate some revenue. They will have some responsibilities as the result of this; they should have a source of revenue."
Last month, the state Senate passed its own ride-hailing legislation. Its plan calls for a 2 percent tax on rides: half to the state and half to local infrastructure projects.
The goal is to keep the trips as inexpensive as possible, said Jeff Bishop, a spokesman for Senate Insurance Committee chairman James Seward, R-Milton, Otsego County, who sponsored the Senate bill.
"The goal of Senate Seward’s legislation is that rides are reasonably priced to allow for accessibility in the market," Bishop said.
Lawmakers and Cuomo have a number of issues to iron out in order to legalize and regulate the industry.
And it comes amid a heavy lobbying campaign by ride-sharing companies, insurers and trial lawyers, a review of records by the Albany Bureau found last month.
The sides are still trying to figure out insurance rates for drivers and passengers, and Cuomo's bill would give the state the oversight over the industry -- not the local governments.
Cahill has continued to push for more local control.
"I think there’s a clear consensus in the Democratic conference, at least, that local control is extremely important – that the different needs of the different communities have to be accounted for in whatever legislation we approve," he said.
For Uber's part, high taxes could impact the affordability of the rides, the company said.
"The current 5.5 percent tax proposal would be the highest tax imposed on ridesharing in any state in the country, and we hope that the framework lawmakers come up with allows Uber to offer upstate communities an affordable, reliable ride," the company said in a statement.
Gerry Geist, executive director of the state Association of Towns, said any revenue sharing needs to ensure that local governments get their cut -- rather than having the money lumped into the state's coffers as part of the budget.
"My concern is whatever you do, we have to be certain that the money doesn’t get swept away and that the money goes to the localities," Geist said.
Includes reporting by Albany Bureau correspondent Jon Campbell.