Is the Imposition of GST on Uber Riders a Tax Grab?

In the recently released Federal Budget the Trudeau administration has decided that it will attempt to “level the playing field” between those who seek out ride sharing options like Uber rather than resort to taking a regular taxi for their short trips.

While the masses connected to the taxi industry will, of course, welcome the new regulations there are many other who feel that this is simply a tax grab that the Feds have latched onto as a way to increase the Federal coffers and at the same time be seen as the rider on the White Horse riding to the rescue of the faltering taxi industry by making it more burdensome for Uber drivers to make a decent wage and for users of the service to pay more for the service.

While it certainly no secret that the taxi industry has been lobbying very hard for measure such as these in an effort to make sure that the playing field is somewhat level there are others who feel that the measures do not go far enough and that further restrictions on the ride sharing industry need to be put in place so that the taxi industry can survive over the long term.

Uber had very little to say about the coming changes other than to say that they are currently reviewing the budget and will have more to say in the future.

While there is really no expected backlash over the measures there are however some who believe that this is the first step in the broadening of the tax code down the not too distant road to also include what is known as the “NetFlix Tax” which would seek to generate tax revenue from the digital streaming of media on the internet.

By first opening the doors to taxing industry changing services like Uber it makes it only more likely that the Feds will seek out other ways to generate income by taxing other emerging services such as the streaming of content which certainly under certain circumstances could well be considered a “good or service” under the current tax code.

The Feds are wasting no time in implementing the tax either with a roll out expected to begin on July 1st of this year.

Since there has been no comment from Uber it remains to be seen how they will implement the measures so that they are in compliance or how they will physically collect the tax from ride sharing customers.

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Sam Seidman, CPA, CA, LPA
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