ATLANTA - A flat 50-cent tax could soon be waiting outside for Georgians looking to hail a ride.
The Georgia Senate passed a bill Wednesday that combines two seemingly unrelated matters: a 50-cent tax on all rides from ride-hailing services, taxis and limousines and a state income tax exemption on relief payments made to farmers after 2018′s Hurricane Michael. It passed by a vote of 51-2 and will now go back to the state House for more debate.
Currently, state officials and ride-hailing companies like Uber and Lyft don’t see eye to eye on whether rides are subject to sales tax, which taxis and limousines have long paid. Uber and Lyft say they are not subject to sales taxes, which can be 7% or higher, and Uber has been disputing a $22 million tax bill.
The General Assembly passed a law earlier this year requiring third-party online marketplaces, including ride-hailing services like Uber and Lyft, to collect sales taxes on behalf of sellers beginning April 1. The legislation passed Wednesday by the Senate would exempt rides from sales tax charges and instead impose the 50-cent per ride flat tax.
“This bill is a compromise bill that we’ve worked on since last year that would eliminate the sales tax portion on ride shares but instead replace it with a flat excise tax,” said Sen. Steve Gooch, a Republican from Dahlonega carrying the bill in the Senate.
Gooch said that if full sales taxes were applied to rides rather than the 50-cent flat tax beginning on April 1, users in Atlanta would pay some of the highest taxes in the country for ride-hailing services. Gooch estimated that the flat tax, if it became law, would bring the state $40 million a year in revenue. He said funds would go toward transportation and infrastructure projects.
But the plan could negatively affect local governments, which would get a cut of sales tax collections but wouldn’t get any of the flat tax.
The provision to create a flat tax on car rides was added to HB 105, a previously unrelated measure that would exempt farmers from having to pay state income tax on relief payments received after 2018′s Hurricane Michael, by the Senate Finance Committee.
A different bill sponsored by Rep. Chuck Martin, an Alpharetta Republican, pending in the House seeks to eliminate taxes on rides altogether.