Taxi drivers threaten to protest against Uber in front of Presidential House

Published Wednesday, May 8, 2019

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The Taxi Union states that the protests will continue at key government institutions such as: The Ministry of Transportation, and Presidential House, among other places. / A.M. Costa Rica archive photo

Taxi drivers threaten to protest against
Uber in front of Presidential House

By the A.M. Costa Rica staff

The taxi drivers’ union, known as the Red Force, announced a protest in front of the building Casa Presidencial* in Zapote.

The objective of the taxi drivers is to press for the response of the institution’s Board of Directors about the closure of Uber.

The Taxi Union states that the protests will continue at key government institutions such as: The Ministry of Transportation, and Presidential House, among other places.

Related to Uber, as A.M. Costa Rica reported on April 25, that company announced that it will collect 13 percent sales tax, making regulation unnecessary

Pablo Heriberto Abarca, deputy, and president of the Economic Affairs Committee of the Legislative Assembly reported that the bill of Law #21.228 known as Reform of the Remunerated Transportation System for Individuals and Regulation of Transport Technology Platform Companies (similar to the transport service provided by Uber), could be archived or canceled if the company charges clients the 13 percent sales tax.

Deputy Abarca said the Uber representatives confirmed to the members of the Commission that, starting in June, it will apply the 13 percent value-added tax , VAT, to its fares. This decision to apply the tax is consistent with the Law of Strengthening Public Finance, transforming Uber into a legal company.

Zoraida Rodríguez Montenegro, Director of Government Relations and Public Policies of Uber said that as of June every trip will charge the 13 percent tax which the user must pay, so the cost of the service will go up as of that month.

Deputy Abarca said that the tax charge on all Uber services represents the legalization of the service, “de facto” or automatically. For that reason, the current project to regulate Uber could be considered unnecessary when this type of business will be legal in June.

In law, de facto describes practices that exist in reality, even if not officially recognized by laws. It is commonly used to refer to what happens in practice.

In addition, Deputy Abarca said that the Economic Affairs Committee could invest more time to create a new law that improves the traditional taxi service, known as a red taxi.

"I think it is absolutely relevant that as of June, the company (Uber) is going to collect the 13 percent tax, which causes legalization of the service as such, a de facto legalization," said Deputy Abarca. “What would remain is how we can help taxis to have a less complicated regulation."

Zoraida Rodríguez, representative of Uber, said the company has always been willing to be regulate, but considered that this bill was wrong to consider Uber' as a public service, denaturing the spirit of the activity and that the amount requested by the government for the inscription of the company of ¢45 million colones approximately (about $74,414) is disproportionate.

"The company has invested more than 30 million dollars in the country and has generated more than 22 thousand jobs, so the amounts established by the project for the registration of the service is disproportionate and would endanger the entry into force of new platforms," said Rodriguez.

According to Rodriguez, 92 percent of members who are currently registered in the country as drivers have relatives who depend directly on the profits generated by the Uber service, so regulating the activity in the terms that the government wants would cause a very negative impact.

On March, the Attorney General, Julio Jurado, told the members of the Economic Affairs Committee that bill of Law #21228 could be constitutionally problematic due to possible violations of the principles of reasonableness and proportionality.

According to Attorney Jurado, the reform is requesting:

- Companies that provide public transport services will have to pay 3 percent tax to the Council of Public Transport. That tax will be charged on the rate to the client.

- The amount collected for this tax will be transferred to the National Mobility Fund, which will also be administered by the Public Transportation Council. The amount collected will be used for the modernization of public transport.

- In addition to this tax, the companies that want to provide transport services must make a registration payment requirement of ¢45 million colones approximately (about $74,414) and renew that registration with another payment of approximately ¢22 million colones (about $36,380).

- The maximum number of vehicles that can operate under the platform mode (like Uber) cannot be more than the number of existing taxis.

The Attorney General said that these factors could be considered as possible violations of the principles of reasonableness and proportionality of the Political Constitution.

Law project #21228 to regulate public transportation was presented by the Ministry of Transportation.

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What should the government do to allow Red taxis and private services like Uber work peacefully in the country? We would like to know your thoughts on this story. Send your comments to: news@amcostarica.com

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