Use of Transportation Network Companies (TNCs) such as Uber and Lyft has grown rapidly in cities across the United States. TNCs often provide a cheaper and more flexible travel option than traditional taxi services, and could improve transportation sustainability if they facilitated more pooled travel and public transit use. However, TNCs’ growth has been linked to increased congestion and emissions. Cities and states have begun regulating TNCs, imposing taxes that are assessed per ride at a flat or percentage rate. Researchers at the University of California, Davis assessed 21 state and local TNC taxes across the United States and developed a method of comparing per-ride and percentage taxes. The researchers then assessed the likelihood of these taxes encouraging more sustainable travel. This policy brief summarizes the findings from that research and provides policy implications.

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Cities and states across the U.S. are assessing fees or taxes on transportation network company (TNC) platforms, such as Uber and Lyft. The goals of these policies include traffic and emissions mitigation, as well as revenue generation, among other objectives. This research aims to assess the goals and effectiveness of these fees in achieving some of these policy objectives, primarily congestion and emissions mitigation. The analysis addresses a core difficulty in comparing TNC fees—some fees are assessed per mile and others per trip. The researchers compared 21 fees implemented by state and local governments across the United States and apply a methodology to compare these diverse fees and taxes based on a hypothetical ride informed by Uber’s fare calculator, as well as other sources. The findings show that when adjusted for comparison, the highest fees, by a wide margin, are assessed in downtown New York City and Chicago (during peak hours). A key policy implication of this research is that most fees or taxes are not large enough to affect enough travelers' choices to hail a TNC, and most do not differentiate between solo and pooled/shared rides. Only San Francisco, Chicago, New York City, and New Jersey differentiate between solo and shared rides, which is likely to influence travelers in choosing to share a ride. This is problematic given that increasing passengers per vehicle mile traveled is an essential strategy in managing congestion and reducing emissions associated with all vehicle travel, including TNCs.

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