HARRISBURG – Uber is trying to sell Pennsylvania lawmakers on a partial solution to the two-month budget impasse, telling them it supports taxing ride-hailing trips statewide to raise desperately needed revenue for public transit.
But the pitch comes with a big stipulation: Uber will only support expanding the state’s 6% sales tax if the commonwealth classifies app-based drivers or couriers as self-reliant contractors,not employees.
Doing so would achieve a longtime goal of tech firms and render moot a 2020 state court ruling that found that Uber drivers are not self-employed. That ruling allowed drivers to receive unemployment benefits they had previously been denied, along with other labor protections like workers’ compensation.
Uber also supports requiring the same app employers to contribute a limited amount of money to flexible savings accounts that workers can use to pay for health insurance or sick days.Freddi Goldstein, Uber’s lobbyist in the state Capitol, told Spotlight PA that the company has lately been shopping its proposed compromise to legislative leaders and the Shapiro administration.
Transit agencies across Pennsylvania, most notably SEPTA in Philadelphia, say they need more state money to stay afloat. Lawmakers have so far struggled to agree on a way to raise more revenue, either through legal cannabis or a tax on slot-like skill games.
State Senate Republicans are on board with Uber’s proposed bargain. Caucus spokesperson Kate Flessner saeid in an email that it “would be a fair and reasonable way to bring uniformity to ride share companies, while helping to ensure they continue to have a strong presence in PA.”
State Senate Majority Leader Joe Pittman (R., Indiana) had previously expressed openness to expanding eligibility for the sales tax as a revenue source, even though he offered no further details at the time.
But state House Democratic spokesperson Elizabeth Rementer said that her caucus is opposed to trading away labor rights for extra revenue.
“Depriving workers of legal protections and basic benefits such as health care and social security in exchange for a … contribution to a flexible savings account is no bargain for the taxpayers left with the tab,” Rementer said. “We appreciate the interest shown by the ride share companies in their efforts to find a long-term funding solution for our mass transit crisis, but this proposal misses the mark.”
A spokesperson for Gov. Josh Shapiro declined to comment.
Where did this idea come from?
The idea of funding transit by taxing ride-booking trips isn’t new.It was first proposed by Transit for All PA, a union-backed grassroots coalition. In a policy memo, the group argued the expanded tax would “not disproportionately burden already marginalized communities,” as users are typically wealthier, and was “unlikely to meaningfully change behaviors and anticipated generated trip revenue.” The group estimated such a proposal would raise approximately $250 million annually.Pennsylvania exempts traditional taxi services and other ground transportation purchases from sales tax. However,