Who Should Pay For Congestion? NYC TLC Drivers Or Passengers? 🤔
As NYC Congestion Pricing plans are finalized, many in TLC industry are worried. Should TLC drivers or passengers pay? Per trip surcharge "status quo" is industry's preferred option
“We want to see an MTA plan that recognizes that the Taxi and FHV industry is the other half of mass transportation in the city of New York…We are supposed to be your partners, not your piggy bank.”
- New York Taxi Workers Alliance (NYTWA) President Bhairavi Desai
The upcoming implementation of NYC’s Congestion Tolling Program to enter Manhattan’s Central Business District (CBD) (i.e., below 60th St), is a big deal for the City and the country in general. It’s also a very big deal for the City’s for-hire transportation industry (a/k/a TLC industry).
The last major update the TLC industry had to digest caused mixed emotions 😑. The MTA indicated that medallion yellow cabs and other TLC-plated for-hire vehicles (FHVs), would be subject to ONLY one congestion toll per day…on top of the current congestion surcharge already in place 🤔. For most people 1+1 = 2, but for the MTA, 1 + 1 = 1 additional congestion toll. The new (additional) congestion toll would likely range from $10 to $23 for NYC taxis and FHVs.
The main pushbacks to the plan from the TLC industry are:
Double Taxation: NYC yellow cabs and FHVs have ALREADY been collecting a $2.50+ congestion related surcharge PER TRIP for the last few years. This has and continues to raise hundreds of millions for the MTA.
Driver Obligation To Pay: Let’s say you believe the final congestion toll is $15 per day. If a driver, not passenger via surcharge, has to pay that toll directly, it adds up (e.g., $15 * 360 days = $5,400 💸💸)! It’s a lot of additional expense for many working class drivers.
Furthermore, implementing congestion tolling on taxis and FHVs could be a logistical nightmare. Many would be coming in & out of the congestion zone multiple times per day. Trusting E-ZPass (MTA in reality) to deliver a smooth technology solution is, at this point in time, foolish.
Closing Arguments
Before NYC Congestion Pricing is finalized, multiple voices continue to speak up. From TLC driver advocates to Uber to former Mayor Bill de Blasio 👀, multiple parties are suggesting that critical changes need to be made before there is no turning back.
New York Taxi Workers Alliance (NYTWA), a large driver advocacy group whose active membership consists of many yellow cab drivers, has called for a total exemption for taxis and a per trip surcharge on Uber & Lyft trips paid for by passengers, not drivers.
Outside of former Mayor de Blasio, the NYTWA also has allies in Assemblymember Robert Carroll (D-Park Slope) and congestion pricing advocate Alex Matthiessen, who have proposed, among other things, a per trip surcharge on Uber/Lyft trips that would equal half of the final congestion toll amount (e.g., if congestion peak toll is $15, there would be a $7.50 passenger surcharge added to a trip).
Medallion politics 🚕 has obviously leaked into these latest proposals, as yellow cabs would benefit vs. directly competing Uber/Lyft trips, IF taxis were totally exempt from additional congestion surcharges. Whether the passenger or driver pays the surcharge, the cost of the Uber/Lyft trips would be disadvantaged vs. yellow cabs.
To quote Assemblymember Robert Carroll (D-Park Slope):
“We need a congestion charge for when people are using Uber and Lyft, and that charge should be calibrated to try to minimize 15 percent to 20 percent of Uber or Lyft trips that touch the zone just like we're trying to reduce 15 percent to 20 percent of car trips that will touch the zone…”
The politics is not even hidden, it can be quoted. We’ve consistently been a thoughtful defender of the medallion industry, when many were silent. However, this selective exemption proposal is quite simply textbook regulatory capture. We’re also not sure why NYTWA members who drive for Uber/Lyft would be supportive of such a proposal - it would go directly against their interests.
“While there are many instances where a win for the yellow taxi sector, is a win for all TLC drivers, sometimes “zero sum” politics (i.e., in order to win, someone must lose) come into play. For example, perhaps the NYTWA wants a congestion pricing exemption for JUST the taxi medallion sector, but not Uber & Lyft 🤔. Is that a crime? No. However, that is not representing the interest of non-medallion TLC drivers, which now outnumber taxi medallion drivers at least 5 to 1, if not more.”
- AutoMarketplace NYC (February 27, 2023)
Josh Gold, Uber’s senior director of policy and communications, also makes an interesting point regarding the taxi medallion industry calling for an absolute exemption, citing Marblegate’s large holdings in the industry. Marblegate is an investment firm based in Greenwich, Connecticut.
“There are other people who think yellow cabs don't deserve the carve-out. Gold said that since private equity firm Marblegate Asset Management is the largest holder of taxi medallions in the city, the argument to exempt cabs on economic fairness grounds doesn't fly. And taxi industry expert Bruce Schaller suggested that making a distinction between the two ways of getting around risks just creating yellow cab-driven congestion.”
Moving beyond NYC taxi politics, a general per trip surcharge addition to the current congestion surcharge is supported by most in the industry, including this publication.
In our opinion, it’s pretty uncontroversial to charge the passenger for taking a trip into the congestion zone. This is the STATUS QUO in fact. How does charging the NYC TLC driver make any sense? That being said, some have suggested it maybe difficult to implement the new congestion tolling surcharge on a per trip basis due to legal and legislative technicalities.
There’s probably a lot still left to play out and we’ll continue to cover major developments. Whatever the final outcome is, it will undoubtedly have a huge impact on NYC’s for-hire transportation sector. TLC drivers, fleets, industry participants and observers should not ignore NYC Congestion Pricing developments and politics.
As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️
NYC City of NY Sold the nyc taxi madallion for billions of dollars to the public for the public after the Department of Environment they check yellow taxis not going to be bad for the Environment and not going to cause any congestion in the NYC then Nyc issued the NYC Taxi madallion permits to the public and for the public Each Taxi madallion is the part of the legal system and Nyc Collected billions of dollars for their madallions NYC Taxis should be exempt for any future congestion tax and previous congestion tax it’s like taxation without representation dear politicians we r the people and you r one of our us be fair to the system god bless you top officals r humans act like god good human being
The deeper issue is here is not the money grab of congestion pricing. What has been lost in this conversation is the woeful mismanagement of the MTA and how they are coming after the medallion/FHV industry with outstretched hands every time they, yet again, blow another deficit in their budget from the bloat AND now known practice of fare evasion both on the subways and busses.
Your article is correct. It makes no sense whatsoever to charge a driver congestion pricing because it is his passenger that desires to go to the CBD. Why do I, as a driver, want to drive someone from Brooklyn to the CBD for $20 and then have to eat $12 and up for congestion pricing? I’d rather cancel the trip and kick the passenger out. Yes, there is disincentive in that scenario to reduce congestion but it comes at the cost of canceled trips and lousy customer service. If the congestion pricing is paid for by the passenger then the passenger must decide if he/she should take an FHV or use mass transit. NOW, you have a financial disincentive in place where someone ( the passenger) has to really think whether or not it’s worth it to pay for a FHV.
Personally, I don’t share all the hoopla over congestion pricing. I don’t see any politician wanting to burden financial struggling drivers with additional cost. My guess is this cost is going to be transferred to the passenger, just like tolls and the current congestion pricing are. I also don’t drive into Manhattan all the time. I have gone many shifts without ever entering the CBD at all. I also start most shifts from the southern eastern most part of the City.
And issue that I see really wreaking havoc in our industry is a proposal to reduce the 25 MPH zones to 20 MPH. That proposal is currently in committee in the City Council. That would be devastating to driver earnings in the form of reduced earnings (higher MPH equals higher earnings) and more fines, either from the NYPD directly or speed camera tickets.