Taxing New Mobility Providers

Report Summary

By Kate Lowe, Phil Ashton, and Quinn Kasal

Ride-hail companies and shared electric scooter (e-scooter) firms have grown exponentially in large U.S. cities over the last decade. These new mobility providers (NMPs) often promote themselves to users and to local governments as providing innovative solutions to pressing transportation needs. At the same time, the rapid growth of these options comes with concerns over increasing social costs, including elevated congestion and vehicle emissions, reduced transit ridership, as well as new conflicts over the use of public rights-of-way.

This report examines the use of taxes, fees, and other fiscal instruments as means to regulate NMPs and address their social costs. It presents a national scan of the 50 most populous U.S. cities, examining the extent and characteristics of NMP taxation (SEE MAPS BELOW). From this national comparison of taxes and fees on ride-hail (also known as transportation network companies, or TNCs) and shared e-scooters, we in turn develop a set of profiles that examine their implementation in local contexts, including the level of fee/tax levied, the inclusion of incentives for socially or environmentally beneficial behaviors, and whether there are provisions to mitigate potentially regressive effects increased user costs.

Our findings indicate significant divergence in the use of fiscal instruments between the two types of NMPs. For TNCs, a sizable minority of cities (20 out of 50, or 40%) had taxes/fees in place for ride-hail trips; these were typically levied on per-trip basis but were rarely structured in obvious ways to align with transportation policy goals. This contrasted with shared e-scooter firms; despite their more recent arrival in U.S. cities, we found that 37 of 39 cities with active e-scooter programs during our study period had instituted taxes or fees; moreover, these fiscal instruments took several creative forms, and cities often overtly linked them to other transportation policy priorities.

Our analysis further examined the different regulatory dynamics shaping the incidence and characteristics of taxes and fees in and by cities. For TNCs, a critical dynamic was state preemption, whereby state legislation prevented cities from regulating ride-hail companies, drivers, or rides; 39 of 50 cities in our study operated under some form of state preemption that restricted their authority to levy local taxes or to benefit from (often token) state fees. On the other hand, state preemption has not been a significant factor in the local responses to shared e-scooter firms. Rather, cities have often met the introduction of e-scooters with pilot programs that integrate a range of creative fiscal instruments and align them with broader transportation policy priorities.

This descriptive scan indicates several areas for further research and policy discussion.  Although each mode has social benefits and costs, the environmental costs of ride-hail appear much greater than those of e-scooters, but ride-hail trip taxes are relatively less common. This scan demonstrates innovation in the taxing space that cities can occupy—e scooters—but not yet benefits or costs of these innovations. The scan also provides evidence that city actors currently are largely unable to capture the social costs of ride hail use because of widespread preemption, let alone design pricing that would support environmental and equity policy goals.