Judge Backs Order Blocking Congestion Tax on Rides in Manhattan
New York City, 42nd Street (Shatterstock)
A state court judge on Thursday left in place an order blocking implementation of new taxes for taxi cabs, for-hire vehicles and ride-hailing services such as Uber and Lyft that make trips into a designated congestion area in Manhattan.
Manhattan Supreme Court Justice Lynn Kotler said a temporary restraining order to levy congestion taxes on taxis and other ride services that make trips into Manhattan below 96th Street, which was supposed to take effect at the beginning of the year, would remain in place until at least Jan. 31.
Kotler’s determination came after hearing oral arguments from the state Attorney General’s Office in defense of the tax and attorneys for drivers, with each side presenting Kotler with dire consequences in the event that the new tax is levied or if it continues to be blocked.
The new tax, passed last year by the State Assembly, imposes a $2.75 charge on ride-hailing services and for-hire services such as black cars and limos for trips in and out of the congestion zone and a $2.50 charge on taxi cabs.
All vehicles would be charged $1 for trips above 96th Street; additionally, there is already a 50 cent surcharge on cab rides that is passed along to the Metropolitan Transportation Authority.
The law requires that the charges be passed along to passengers.
Assistant Attorney General Noam Lerer argued that the Legislature intended for the tax to ease rising automobile congestion in Manhattan while providing badly needed revenue for the MTA.
Lerer said that the MTA drew up its budget with the congestion tax revenue in mind and that it is losing $1 million each day that Kotler’s injunction remains in place. If it keeps up, he argued, the MTA may have to make cuts in other areas to make up for the missing revenue.
“Something is going to have to give,” Lerer said.
But Brett Berman, a partner at Fox Rothschild who is representing a group of cabbies and taxicab medallion owners, argued that the new tax is being levied on cabbies at a time when app-based ride-hailing services have taken a big bite out of their business and the value of taxicab medallions have plummeted.
Berman also noted that app-based ride-hailing services will only be hit with a 75-cent charge for rides when their drivers are offering shared-ride services such as Uber Pool, regardless of whether the drivers are actually carrying more than one passenger.
“It is unprecedented what has happened in this industry,” Berman said. The attorney also noted that in 2018, eight drivers licensed by the city’s Taxi and Limousine Commission committed suicide, which advocates have chalked up to financial hardship.
The plaintiffs also argue that the TLC would need to promulgate new rules to pass the costs of the new taxes along to passengers, but the TLC, a defendant in the case, says that new regulations aren’t needed.
While the TLC finds itself at odds with cab drivers and medallion in the courtroom, Meera Joshi, chairman and CEO of the commission, said that, after the congestion tax is implemented, it would cost $5.80 just to step into a cab and that is going to be “devastating” for the industry.
Uber and Lyft, which have expressed support for congestion pricing schemes in New York City but were recently subjected to a one-year freeze on the number of cars that the companies can have on the city’s streets, are not parties to the suit.
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