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April 2017

Federal budget taps Uber X for HST, same as any taxi driver

by Mike Beggs

The federal budget handed down March 22 had some bad news for consumers, and Uber.

Uber passengers will, reportedly, have to pay the13 percent GST/HST on top of their rides effective July 1.

To do this, the federal government will amend the definitions of a taxi business within the Excise Tax Act to ensure ridesharing businesses are subject to the same HST/GST rules as cabs.

The tax is expected to generate $3 million for government coffers in 2017-18.

The move was made in an effort to “reflect the changes in the economy.” Canadians using Uber have not been paying taxes for the service, they’ve just been paying for, “tools, surcharges and fees”.

“What we’ve done is say, if you’re in an Uber or in a taxi, you pay GST. That’s consistent with what Canadians expect,’ Finance Minister Bill Morneau told MobileSyrup.

This will be some welcome news for licensed cabbies.

“That’s the best thing for the taxi industry,” says City Taxi owner Avtar Sekhon. “That puts another 13 percent into Uber’s fares. But I’m not yet sure (what effect it will have), because Uber will just take out more advertising, and the City is in favour of Uber. The City isn’t working for the taxi industry.”

To prevent drivers from continuing to circumvent the HST, he suggests, “To drive a vehicle for hire you must have an HST number, and it must be registered with the City or they won’t renew your license.”

Taxi Action president Behrouz Khamseh suggests with these measures, the federal government is, “just making it more kosher.”

He stresses the driver is not going to lose money, with Uber simply adding 13 percent to the fare. As he sees it, Uber itself will be collecting and remitting the HST to the government.

But will Uber comply, given its history of skirting the rules?

“I don’t know,” he says. “I’m not really sure what’s going to happen.”

Long-time owner Al Moore says this news represents a blow to Uber, but notes, “they can bring their rates down, so drivers don’t run away.” Right now, Uber is taking 20 to 30 percent in fees from drivers off the top of the fare.

No details were given about how this new regulation will unfold.

“Is Uber going to send the equivalent of a T1, or T4 slip to the government,” he observes. “We have no way of telling.”

“If you’re a taxi driver, you have to file. Are they going to make them go there? If they do, (many of them will) leave Uber. It could affect them in so many ways. And if these guys have to start paying income tax (that’s another blow).”

“The effect will depend on how the government makes them pay it, the paper trail. Many of these guys aren’t making a lot of money (to begin with).”

He notes it costs about $2,500 a month to operate a car, gas excluded.

Could this be just another legislative smokescreen to legitimize Uber, with the government having no intention of really going after them for the HST?

“I am responsible for HST. If they treat Uber the way they treat us, each driver will have to declare,” Moore comments. “Are they going to let them off with the $30,000 exemption? I don’t see how they can.”

Uber Canada’s Susie Health told MobileSyrup her company was reviewing the budget and would have more to say in the coming days.

 

2017 Taxi News

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