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Sales Tax On Uber Says Sharing Economy Isn't Above The Law

03/30/2017 12:01 EDT | Updated 03/30/2017 12:02 EDT

Tucked away towards the back of the recent federal budget was a short passage that represented a significant victory for those pushing back against the so-called sharing economy and its destructive impact on existing industries, as well as safeguards for both workers and the public.

The passage, under the heading "Updating Tax Measures to Reflect Changes in the Economy," committed the federal government to changing the Excise Tax Act to define ridesharing services such as Uber as taxi companies. It is a simple change that makes Uber subject to paying the same GST and HST as existing cab companies.


There are no more details than this in the budget, though the government has said the change will be in place by July 1.

This is good news for those of us who have been concerned about the sharing economy since the beginning.

Let's not fool ourselves. These companies are not about neighbours offering rides to neighbours, as Uber and Lyft claim.

Both Uber and Lyft are multibillion-dollar corporations -- Uber's worth is estimated at between US$28 billion and US$62 billion, for example, with business models based on ignoring the rules that govern the rest of industries.

Uber wants to compete with local taxis, but not play by the same rules.

Take Uber. Recently in Windsor, Ont., the company successfully fought back calls from the local taxi industry that its drivers be required to have cameras in their cars, just like traditional taxi drivers must, saying that would add to the cost of taking Uber. In London, Ont., the company is threatening to pull out of the city over a similar measure.

In other words, Uber wants to compete with local taxis, but not play by the same rules.

It's a similar story around the world, wherever Uber is told it must obey local laws. On Tuesday, the company said it is leaving Denmark after that country said its drivers must live up to the local taxi regulations, including having mandatory fare meters.

For its part, Uber is already pushing back against last week's budget -- saying that requiring it to charge the GST or HST will increase the cost of using its service.

uber app

(Lovr077 via Getty Images)

Comments such as that just prove what critics have been saying about Uber all along -- it and other ridesharing services are undercutting traditional taxis by offering the same service, without bothering to work and abide by the same regulations and tax laws as other businesses in the industry.

The company said it will meet with the federal government about the plan. The company is free to meet with whoever it likes, but it and every MP needs to understand that Unifor and taxi drivers all across the country expect the federal government to make good on the commitments made in the budget. The introduction of regulations to apply the same tax is simply about fairness and having the company pay its fair share into the roads that tax dollars help to build.

The federal government has set an important precedent by applying the GST and HST to ridesharing services. It has said that such companies are not above the law. Innovation and new ways of doing things are welcome, but breaking the law is not.

The government is on the right track by applying the GST and HST to ridesharing services.

It is worth noting, too, that the move was motivated by a desire to ensure tax laws keep up with changes in the economy that have made the "tax statures less relevant than when they were first introduced," according to the budget's own words.

Keeping our laws relevant is always a worthy goal, and need not stop with Uber.

Our current tax laws are likewise out of date when it comes to other disruptive technology-based companies such as Netflix. As federal laws and regulations are updated, Ottawa needs to consider how to address online streaming services to ensure these companies are paying their fair share.

In the case of Netflix and other streaming services, for instance, applying the GST and HST to Canadian subscriber fees could help fund more Canadian content.

The government is on the right track by applying the GST and HST to ridesharing services. We must now ensure it continues to follow the path it has set.

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