Two British taxi companies have launched a crowdfunding drive for the last leg of a lengthy legal battle with Uber that could result in higher cab fares.
Uber will seek, at a supreme court hearing in July, a ruling on contractual models that affect whether VAT applies to private-hire companies outside London, which it has argued would level the playing field across the UK.
However, the minicab industry has fought the move, which it said could raise the cost of taxi journeys outside London by at least 20%.
The tossers like Jololyon insisted that Uber must pay VAT. So, righteously, Uber is insisting the cab firms must pay VAT. Spot on. Bit of a pisser for consumers but that’s Jololyon’s fault.
Hmmmm. VAT schedule 700/25 says taxi transport is liable to standard rate VAT if fewer than ten seats.
” Uber is insisting the cab firms must pay VAT. Spot on. Bit of a pisser for consumers but that’s Jololyon’s fault.”
I thought ‘economic theory’ says that cab fares in a competitive market are already as high as the market will bear, and thus there is no ability for cab firms to raise their prices, for any reason. So they will have to pay the tax increase out of their own profits at no cost to the consumer.
Or ‘economic theory’ is a crock of sh*t that bears little if no resemblance to the real world.
Your choice.
jgh said:
“Hmmmm. VAT schedule 700/25 says taxi transport is liable to standard rate VAT if fewer than ten seats.”
It’s about how you apply the threshold – which is £90,000, so high enough that a cab driver can stay below it and still make a reasonable living.
The question is, do you look at each taxi driver individually, and say each one is below the threshold, so doesn’t need to register for or charge VAT, or do you add together all the drivers working for a particular firm, in which case they’re well over the threshold and they all have to charge VAT.
They’ve mostly structured it so that theoretically each driver is in business by themselves, and the cab company just answers the ‘phone and passes on jobs to them. So they claim each one is separate, so has their own VAT threshold, which they’re below, so doesn’t need to charge VAT.
That’s also the Uber model, but Jolyon and other campaigners pushed for that to be ignored, so that it was looked at collectively; together they’re clearly over the threshold so VAT has to be charged.
I think the Uber decision was wrong, but given what the courts decided in Uber it’s difficult t see why Uber drivers should be amalgamated and provincial mini cab firms not – indeed the drivers generally look more genuinely independent under the Uber structure, with drivers competing for jobs, whereas most provincial mini cab firms just allocate jobs to drivers centrally.
Jim said:
“I thought ‘economic theory’ says that cab fares in a competitive market are already as high as the market will bear”
No, it’s the point where supply and demand maximise sales. In the current market, you could charge more, and some customers would pay more, but others wouldn’t, and others would switch to cheaper firms.
But when the cost changes for everyone in the market, that supply curve shifts. Fewer suppliers will sell at the old price (some will put their prices up, others will go and do something else), so the supply & demand curves shift and find a new equilibrium.
Now you’re right that the new market price probably won’t be 20% higher; there will be fewer customers at that price, as some will take alternatives, restricting price rises, but also some drivers will quit and do something else or retire, reducing supply, so the new equilibrium point could be somewhere else.
But it will rise, and that isn’t saying that market theories are wrong, just that they’re a bit more dynamic than you’re assuming.
In the dim-distant past, I seem to recall that this VAT thing came up before with London cabbies. Or maybe it was some other sort of tax. Anyhoo, the London cabbies were up in arms and threatened to ‘strike’, hence bringing London to a standstill. The politicians backed down because, of course, it would create problems for them like having to walk to their clubs.
“my one question would be: if they are required to sit there all day, how do they legitimately seek work?”
@RichardT: our host told us that companies couldn’t raise prices to pay Rachel Reeves’ new NI taxes, because if they had the ability to raise prices they already would have.
Now you’re saying companies can raise prices to pay a universally imposed tax.
So who is right?
Sorry, ignore the random quote in the above comment.
When will this place get an edit function?????
Yes I agree the Uber tax decision was wrong. Uber is just another radio control centre. The technology used is irrelevant.
Jim:
I suppose the difference is that one company isn’t able to raise prices because it’s competing with other businesses (who if they don’t raise prices will take lots of the one company’s business), while a universal tax is paid by all businesses.
Of course this assumes there’s no substitution possible, and there’s no successful lobbying to be exempted from the tax. Both of these happen all the time, so while it’s possible in theory it never actually happens.
I mean the whole legal battle is for minicab companies to be exempted from the rules they insisted applied to Uber.
By law, margarine sold in the United States had to be an off-putting pus white until the 50’s/60’s.
Because the dairy farmers successfully lobbied to pass laws stopping margarine manufacturers being allowed to add harmless food dye to make it a mellow yellow I Can’t Believe It’s Not Butter colour.
People of the same trade seldom meet together, even for merriment and diversion eh?
Having once briefly done minicabbing, the argument the driver’s working for the company in far stronger with minicabbing. You get no choice of rides.* And you’re required to be available for the shift. Uber bid for rides & work the hours they want.
I wonder how much tax this will actually raise? If you’re VATing you can offset all your inputs. If net income drops, so does tax paid. Factor in higher prices = less demand. The whole exercise could end up revenue neutral.
Oh and the fox batterer’s a cvnt. But we knew that anyway.
*I can remember the crazy bint was given to new drivers without the option. Great fat thing was plumbed in with a piss bag she never emptied. She stunk & she’d leak all over the back seat. Get it on your hands manhandling her in & out. Have her in the car, you’d have to clean it & park up with doors open until the stink cleared. Certainly put you off your dinner kebab.**
** No! Not elephant leg! Proper one’s with diced lamb on a skewer. Elephant leg’s reserved for drunk Brits assholes who know no better.
Or, just like the fact the the revenue is losing out on tax revenue on fags following tax hikes as people buy they fags from the ice cream van that comes every week regardless of weather. Add 20% on minicabs and you’ll see more taxi touts and off the clock jobs.
@Steve
I can’t believe it’s nob butter
I can’t believe it. Snot butter!
I sympathise with farmers on marge. You shouldn’t be able to pass the vile stuff as the real thing.They should have to dye it fluorescent green. And why does is get spread on bread in London caffs? We’re not Northerners, for heaven’s sake.
Justin – that’s what she said
Rhoda – I can believe it. Thanks, Starmer.
BiS – margarine is manky stuff. Used to be sold in Germany as “coal butter”, but I’m not sure if you could buy it in anthracite or bituminous flavours.