[To be clear: I've never used Uber nor would I generally consider it over my local 'trolley' in the ~35K population town in which I live.]
In economics and particularly in industrial organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power.
I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no? We always tried to manage our drivers for an elastic supply of capacity (much like an ad exchange). Otherwise, we'd be overwhelmed like the under-covered transport problem in Austin during SXSW (I believe a result of the lack of Uber availability). Uber's radio adverts explicitly state that it's "drive when you want for extra money," and if that is not what they actually offer then Lyft has a huge opportunity to acquire/retain more/better drivers and maintain a rapid ability to scale for capacity.
I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US (I don't actually care if Canada bans Uber altogether, for example, I am more interested in the concepts themselves), and maybe a total rethink about how to organize labor.
I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.
The driver does not raise the price, Uber does. Uber has the market power here.
>I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no?
Perhaps, I should have been more direct. A contractor should be able to set and negotiate rates. If they can't do that I think they're an employee. For example, if I need to hire a general contractor for a construction job I can shop around, compare rates, pick the best one AND haggle with them if need be. If I need to hire an Uber, I have no "haggle-power" OR ability to shop around because Uber sets the rate. None of the contractors are competing against each other because Uber controls the marketplace and this is where I think the contractor designation breaks down. If you tightly control the market, the people in it are employees, if the market is more free, the people in it are probably contractors.
>I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US, and maybe a total rethink about how to organize labor. I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.
This sounds interesting but personally I'm of the mind that poor labor organization is a political problem. How would your app help workers beyond just a place to communicate?
Uber also doesn't control the market. There is also Lyft and any other competitor is welcome to start and offer better rates for the driver. Or even offer variable pricing where every driver can set their own rates and consumers can pick the lowest bidder. Drivers have the power to switch providers or use multiple simultaneously.
Just because Uber doesn't adhere to our common social contract doesn't mean they don't have to. Unethical behavior is not justification for that same behavior.
I'm reasonably certain the tax code has no regulation that says you must be classed a contractor if you meet certain criteria.
https://en.wikipedia.org/wiki/Dial-a-truck
These systems morphed into what is called a 'load board,' and Landstar operated what was more of a network of independent trucking brokers with their own shared/ private load board.
There are a certain number of criteria for employees vs contractors, based on whether training/equipment is provided, price setting, ability to turn down jobs, etc etc.
If you're classified as an employee, there are a bunch of things you have to do, such as collect GST, deal with health care, sick days, paternity leave, taxes, etc.
Uber is making the case that its drivers are contractors, since they set their own hours and purchase and maintain all their own equipment. It's a plausible argument, and that's something for the courts to sort out.
Just saying that they need to collect GST because the drivers are employees is begging the question.
If Uber drivers are classified as employees, what's next? Upwork and eLance workers classified as employees?
If the good or service is being provided by a non-taxi contractor who makes less than 30k a year, then you don't have to collect the GST and the tax doesn't cover that.
If the good or service is being provided by Uber, a non-contractor who makes over 30k a year, then you have to pay the tax.
What we're debating here is who provides the service and their legal status.
There's a certain amount of circular reasoning inherent here, because a government ministry made a declaration. It's not just an objective observation of reality, it's a declaration of what that reality will be henceforth.
Was it a good decision? In my opinion yes, because it better reflects the original intent of this particular tax. Anyone trading on the brand-name of "Uber" and using Uber's infrastructure is not a small supplier (who has to build and market their own brand and build their own infrastructure). And they are clearly supplying a good or service, which was my point expressed in embryonic form above, so they can go ahead and collect the tax.
My point is that Uber did not have to pay taxes, and their obligation to collect taxes was unclear. Under the new law they have the collect taxes. Under the old law, it was plausible that they didn't.
The main takeaway is that most aspects of the legal system, including definitions for commonly accepted terms, are not actually clear.
Especially your argument on intents of taxes. I don't believe that brand-name and infrastructure alone make an employee out of an independent contractor. Also, based on your brandname and infrastructure arguement, should people who sell handicrafts on Etsy or Amazon be classified as employees of Amazon and be forced to pay GST on all sales?
Also, they wouldn't pay GST; they would collect it from customers and pass it on to the government.
The question is what entity provides the service? In name, it's Uber. Do you take a Joe Johnson? Or do you take an Uber?
The point of contact is Uber also. You contact Uber for a ride, not Joe Johnson.
What entity sets the price? What entity collects the money? Uber.
There are some differences with Amazon and Etsy, but in general I think for this purpose if you partner up with a big company, you are not necessarily a small supplier anymore.
Basically, the taxation law is unclear, because you could easily argue that the service is purchased in the United States, where the Uber servers and the internet connections are. In that case, we're talking about Uber not really being a Canadian company, just that it has subcontractors working in Canada, making it exempt from taxes.
It seems like a lot of people have already decided whether or not Uber should be paying taxes, and now are retroactively applying logic to justify their original decision.
I could support that view, as long as they then pay taxes on that income in the US. I don't personally like the idea of shifting the money like that; I think eliminating such tactics would do a lot to fix tax havens. But at the same time I also recognize it as a pretty common and typically legal tactic for tax purposes.
The EU, for instance, closed that hole with the law that VAT taxes will be paid based on the customer's location. If such a law existed in Canada, then Uber wouldn't be able to argue that the purchase was made in the US.
> It seems like a lot of people have already decided whether or not Uber should be paying taxes, and now are retroactively applying logic to justify their original decision.
I agree, though I hope you weren't applying that to me. I was taking Uber's view as a given, but to me it still seemed that taxes would be owed for services rendered. Just that it would be services rendered to the drivers, not to the riders.
I find that kind of argumentation silly. They brought to the taxi industry, what is common in other industries, like construction, tech, etc. Stated differently, Uber has been able to provide a competitive service by legally structuring themselves in a way maximizes return for the themselves, for the driver, but still keeps costs low client due to say structuring.
Is your argument that you wish they had structured it differently so they were forced to pay more taxes? If that was the case then the drivers would be making a less, and the passengers would pay a more to cover the costs of the GST, and I don't see the point in that.
If taxi companies want to level the playing field, why don't structure themselves in more innovative ways like Uber did instead of forcing others to pay more taxes?
The government is doing exactly the right thing in changing the law so that irrelevant differences in corporate structure don't affect the tax paid.
In fact, they haven't. They're taking a huge loss on subsidies to the fares.
No. A loophole is when a given law is exploited in a way that was not intended by the people who wrote it, usually by resorting to small technicalities in the law itself, or by referring to other, related laws.
In this particular case, a law that was intended to benefit small businesses is being exploited by a mega corp. Hence, loophole.
I download the Uber app, Uber finds me a ride, Uber sets the price, Uber charges me, and I pay Uber. Uber should be collecting GST/sales tax. I don't understand how else you could look at it!
Uber is essentially doing the same thing here in Australia and the courts are getting involved to make a ruling.
The consumer is paying Uber. Whether Uber uses employees, contractors, clockwork automatons or aliens to provide their service is irrelevant.
"I call manpower, manpower sets the price, manpower charges me, and I pay manpower!"
Except in that case temp agencies are clearly employing contractors, and thus don't have to pay GST.
Not everything is black and white. If they were, the government would easily have been able to block their actions. Right now they're trying to figure out what's going on and charge them appropriately.
The intent of the law is pretty clear - serious businesses (That do more then $30,000/year in sales) are expected to pay taxes. Small ones are not - because of the small amount of tax revenue, and the high burden of compliance for individuals.
The cost of compliance for Uber is trivial. It's a bloody app, for Pete's sakes.
In turn, drivers who earn > $30k should provide their HST number to Uber, and Uber should be billed HST in remittances.
In turn, drivers can write off HST paid on all business-related expenses.
Yay, Value Added Taxes.
Consumer buy ride services from Uber.
If Uber switches to (self driving) cars that Uber owns itself, how does that change the sales tax model? The product is still essentially the same, the consumer still pays Uber, tax shouldn't change here. The backend shouldn't dictate whether sales tax is applicable here.
Etsy is a general marketplace and should handle sales tax/GST just like Amazon does. Which it does.
The concept of Uber being a marketplace is utterly ridiculous.
> When you buy a book from a seller on Amazon, who sets the price?
The answer is that the seller always sets the price. Sometimes the seller is Amazon itself, and other times it's not.
Can a software contractor code in any programming language and on and operating system, whether or not the client uses them? Can he or she flout the HR policies, while on site?
A software contractor can indeed work in whatever they want, but the contract may stipulate some things about that and not doing so would be breach of contract. Obviously a contractor is bound to the terms of their contract.
In this case the analogy is the contractor using their own computer and software to manage their work process, not terms of what the work product is.
Likewise, if they're not an employee and their contract doesn't stipulate anything about behaviour on site than I would expect them to follow the law rather than policies they never agreed to... Is everyone entering a workplace subject to HR rules they've never even seen?
For reference, the things that I was vaguely referring to are described in detail here: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html#facto...
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/txlmsn/menu-e...
I do think it was pretty unclear though if you go up the reply chain. :)
I'm a software development contractor myself. But I don't handle the revenue of the company or companies I work for, from their customers. So the GST on that revenue is none of my business at all.
Similarly, a cab company could operate such that cabbies are contractors, but the company collects the fares, and then pays the cabbies out of that under whatever compensation terms are between the cabbies and the company.
In that case, since the company is not a small operator meeting the 30K-and-under rules, it has to collect and remit GST.
Some of the drivers might meet the rule themselves. They bill the company with their invoices and do their own GST accounting. Those that work a lot charge the GST. Some that work only little can get away without it. Either way, that makes no difference to the cab company. When that company is charged GST by a contractor, it can probably subtract that from the GST it collects and remits as a "GST input credit". When it isn't charged GST, it doesn't subtract.
Either way, the company can get the contractors "GST free". This is fair when we consider that a company with permanent employees also gets them "GST free".
The "GST cheating" in Uber is probably that the drivers themselves are not just considered contractors, but entire one-person transportation businesses which collect revenue directly from the riders. Effectively, each Uber driver is an entire one-person cab company operating one cab. Uber is then their supplier: they pay something to Uber for the services of being in the Uber network.
If there are large numbers of part-time Uber drivers that meet the 30K exemption, then that's a big loss of potential GST revenue to CCRA, compared to if those drivers were contractors who get paid by a cab company that itself collects fares with GST (even with the input credits they may get). When a driver meets the exemption, the CCRA gets no GST whatsoever from that piece of the pie: not even the difference between GST on some sales, and input credits with respect to the driver associated with those sales
This is Canada. I'm sure that's how Uber would like to see it but not everybody agrees:
http://business.financialpost.com/news/transportation/uber-d...
It would wreck the cab industry if dispatch companies (to which cabs are exclusively tied) had to make all their drivers employees.
Besides, even without innovation, cabs/ubers can just cost more, or cab company owners (I don't mean the drivers) can just make less profit.
edit: I also think that welfare and healthcare should come from the government and not from companies, but I just don't understand how being profitable enough to pay people decent wages is a political problem at all. Nothing political about this - it just requires making a simple decision to divert some of your profit into something other than shareholder pockets.
Yes, one is a technical problem, the other is a political problem. The first one we just solve by being smarter, the second one...has anyone ever successfully managed to treat private drivers as employees rather than independents?
In my opinion, basic benefits should be provided to all citizens, not just the ones with the correct employment status. Note that in Canada, it's already like this, so this isn't what we are arguing about in this context. Contracting work is much easier to stomach in Canada because retirement and health is provided by the state rather than the company (and if the USA did the same thing, it would really make labor markets much more liquid).
At the end of the day, might as well turn this into a technical problem by getting rid of the driver...oh.
Yes. The rocket thing is the current apogee of a (remarkably phallic) ego war between billionaires. Most automation that would truly benefit society is boring, low-margin work. There's no massive ROI in scrubbing out a toilet or mopping a floor, so we continue to pay humans survival wages to do that kind of miserable work. For these Industry Titans, a $2.5 million hypercar just doesn't do it anymore. Robert Mercer's 200-foot, 4-story yacht with an elevator is okay, but Elon Musk's rocket shooting other people off to die on Mars (or likely partway) is a real dominance display.
When this sentence is used by the well-connected elite of the best-funded region in the world, somewhere, the world's tiniest orchestra plays a sad tune on the world's tiniest instruments.
Seriously, guys ~~
This is under dispute, and I think you're going to find that governments around the world disagree with you.
Uber is like a builder who hires contractors. The builder's revenue is >30 k CAD therefore they need to collect and remit GST.
If some of the contractors were to make less than 30 k per year, then they don't need to charge GST, regardless of who the builder is or the size of the projects they work on.
The "end user", the person paying for the house, deals with the builder, hence pays GST.
If you say you'll build me a website for $100, and I in turn contract that out to some guy in India, I'm still required to charge you $100 + $5 GST. The fact that I didn't use an employee to provide the service is of no issue.
It's right to close the loophole that really should never have existed in the first place, if not for industry lobbyists.