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Budget proposal extends sales tax to Uber, Lyft

[anvplayer video=”987295″ /] PROVIDENCE, R.I. (WPRI) – When Rhode Island’s new state budget passed the House Finance Committee early Wednesday morning, it included a provision to clarify that ride-hailing tech companies like Uber and Lyft, among all others, are required to collect the 7% sales tax from their riders.

“We’re going to tax them the same as taxis,” House Speaker Nicholas Mattiello, D-Cranston, told Eyewitness News before the budget was revealed. “We want parity and equity.”

The new budget, set to be voted on by the full House next week, makes it clear that so-called “Transportation Network Companies” that use digital networks to pre-arrange rides are included in the types of companies that are required to collect the sales tax from customers and remit the money to the Division of Taxation.

The General Assembly actually passed a law extending the sales tax to ride-hailing companies in 2012, but House spokesman Larry Berman said the Division of Taxation reported to the legislature that the companies were not properly complying.

The problem, in part, was that the law could have been interpreted to mean the drivers – who are classified as independent contractors – were responsible for collecting the taxes. The new language makes it clear that the companies themselves are required to collect the tax. Both Uber and Lyft use a smartphone app to collect payment.

An Uber spokesperson said Wednesday the company was reviewing the new budget proposal but didn’t have a specific comment this early in the process.

A spokesperson for Lyft also said the company was reviewing the proposal. Chelsea Wilson said in a statement, “We’re currently reviewing the proposal, but are continuing efforts to work with state leaders toward common-sense rules for ridesharing in Rhode Island. We are hopeful Rhode Island will join the more than 30 states that have passed frameworks encouraging innovation and preserving modern transportation options for residents and visitors.”

Another proposed bill would further regulate transportation network companies by requiring stronger background checks, proof of insurance and other measures. Rep. John Edwards, D-Portsmouth, the House majority whip and one of the bill’s sponsors, says legislative leaders are working to pass the bill by the end of the session.