Delay the taxi tax [Editorial]

Our view: Baltimore should wait to collect new per-passenger fees so the effort can be coordinated with a Public Service Commission rate case

November 13, 2013

A revolt is brewing among Baltimore taxi and limo operators, who are protesting a new city tax of 25 cents per passenger that went into effect Oct. 1. The taxi owners claim the new tax will be difficult to collect and that they can't pass the additional cost on to consumers by raising their rates. So, in what they are calling an act of civil disobedience, the companies say they won't pay. Meanwhile, the city is insisting it will take them to court if they don't. Before things get ugly, the city and its cabbies need to take a step back from the hole they are digging for themselves and come up with a way to end the standoff that both sides can live with.

It's true there is a long American tradition of citizens refusing to pay taxes that support policies they oppose. Such protests go back to the beginning of the republic, most famously in Henry David Thoreau's quixotic, one-man campaign against the U.S. war with Mexico in the 1840s. But Mayor Stephanie Rawlings-Blake wants to use the $1.3 million she expects the tax will raise for school improvements, blight reduction and cuts to city property taxes, not to fund an expansionist foreign military adventure. The type of upgrades she is talking about represent reasonable goals for the city that ultimately will benefit everyone who lives and works in Baltimore, including its taxi and limo operators.

The companies say collecting the new tax will be a burden because drivers will be required to keep precise count of how many riders they transport every day and turn in the tally sheet with their tax payments at the end of each month. They say their cars aren't equipped to do that and that keeping track of all that paperwork would stretch the capacities of smaller mom-and-pop cab companies where the owner is also the driver who works 12-hour shifts and serves as chief maintenance, safety, financial and executive officer as well.

But, seriously, how hard can it be for a driver to click a hand-held counter every time someone enters a cab, or to simply tick off a numbered sheet of paper taped to the dashboard? This isn't rocket science, and there are plenty of low-tech ways for drivers to keep tabs on how many passengers they are carrying without installing expensive new equipment in their vehicles.

On the other hand, the livery operators may have a point in saying they should be able to increase their rates to offset the cost of the new tax. If a driver picks up three passengers for a $5 trip, he loses 15 percent of his fare to the tax man before his cab even starts rolling. Faced with a similar levy on their customers, hardware store or gas station owners would simply up the price of their items by a similar amount to erase the tax's effect on their bottom line. But cab and limo companies can't do that because their rates are set by the state Public Service Commission.

Taxi and limo operators have been negotiating over their rates with the PSC for years. Both they and the city should ask the commission to consider the tax in that context. That's likely to lead to a better outcome than defying Baltimore's tax department. Meanwhile, the city should let those talks proceed before threatening to turn over the companies' tax bills to the collection department or suing them in court.

Delaying more drastic action would be a show of good faith by the city that a reasonable compromise can be achieved, and it won't make an appreciable difference in the city's annual tax revenues. But it could help persuade the livery drivers that the city isn't going to stiff them on their fares during the busiest season of the year — which might make them a little more willing to pay their taxes.

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