One of the initiatives would raise fees on rideshares; the other two would impose a new sales tax on privately owned parking spaces and assess a new fee on all retail deliveries. Two of the initiatives – higher fees on rideshares and new fees on package deliveries – were mentioned by Transportation Secretary Monica Tibbits-Nutt at an April event where she talked about what taxes and fees were being considered by the Healey administration’s task force on transportation revenue.
Those comments, which also mentioned tolls at the state’s borders and increased payroll taxes, prompted Gov. Maura Healey to reprimand her secretary and rule tolls at the border off the table. She also suggested she was more interested in making the state competitive than boosting taxes and fees. The task force is expected to complete its report by the end of the year.
In its analysis, the Metropolitan Area Planning Council didn’t address the politics of finding new transportation revenues. Lizzi Weyant, the deputy executive director of the planning council, said the goal was to provide the public and the task force with information. She said the three initiatives would raise only a small portion of the billions of dollars needed for the transportation system of the future and promised a more comprehensive list of revenue measures in September.
Weyant said the reports weren’t requested by the Healey administration, but the council wanted them to be part of the ongoing discussion. “We want these revenue-raising measures to be part of the mix,” she said.
Here’s a rundown of the three proposals:
Retail Delivery Charges
Potential: The Metropolitan Area Planning Council says there are no publicly available estimates of the number of retail and food deliveries in Massachusetts. The council estimates there are about 445 million annual package deliveries in Massachusetts and more than 120 million annual food deliveries. And deliveries are rising. Nationally, e-commerce represents about 15.6 percent of retail sales; in Massachusetts, it’s 25 percent. All the delivery trucks on the roads add to congestion and emissions.
What do other states do? Many states are looking at retail delivery fees, but so far only Colorado and Minnesota have approved them. Colorado assesses a 29-cent charge on deliveries while Minnesota has a 50-cent charge. Both states exempt some types of deliveries from the charge. Typically, items not subject to the state sales tax are exempted, as are groceries and items sold by smaller retailers.
What does MAPC recommend? The council prefers the Colorado approach generally, settling on an estimate of 385 million deliveries subject to the retail delivery fee. Using the 29-cent fee, Massachusetts would generate $104 million. Using Minnesota’s 50-cent fee, the revenue total would rise to $192.5 million.
A Parking Sales Tax
Potential: Parking is expensive in the larger cities in Massachusetts. In calculating the impact of a sales tax on parking, the council assumed half of the commercial parking spaces in a municipality would be occupied for eight hours per day. The average daily charge, against which a sales tax would be applied, was $34 in downtown Boston. It was $39 in Cambridge, $12 in Worcester, and $23 in Springfield.
What do other states do? Many cities in other states impose sales taxes on commercial parking. Of those surveyed by the Metropolitan Area Planning Council, Los Angeles was the lowest at 10 percent and Pittsburgh was the highest at 37.5 percent. In between were New York at 10.4 percent; Washington, DC, at 18 percent; and Philadelphia at 22.5 percent.
What does MAPC recommend? The council examined parking sales taxes of 10 percent, 17.5 percent, and 25 percent in Boston, Cambridge, Worcester, and Springfield. The total revenue haul for each tax rate was $30 million, $52 million, and $74 million, with Boston and Cambridge accounting for roughly 93 percent of the total. The council said those numbers should be considered base amounts because more parking is available outside those municipalities that could theoretically be taxed.
Rideshare Fees
Potential: The state currently collects 20 cents a ride from Uber and Lyft, a fee that has remained unchanged since 2016. In 2023, according to the state, 78.7 million rideshare trips originated in Massachusetts, generating $15.7 million in revenue. Covid knocked the rideshare industry for a loop in 2020 and it still hasn’t fully recovered in terms of trips. The 2023 trip figure is about what it was in 2018 and it is expected to rebound to 2019 levels soon.
What do other states do? The Metropolitan Area Planning Council says 39 cites or counties, 20 states, and the District of Columbia all assess fees on Uber and Lyft rides. Some, like Massachusetts, assess a flat rate per trip, while others peg the fee to a percentage of the cost of the ride. New York City does both. Percentages range from a low of 1 percent in Alabama to a high of nearly 9 percent in New York City.
What does MAPC recommend? The council recommends a fee of 6.25 percent of the cost of the ride, which would generate $140 million annually assuming the number of rides rebounds to 2019 levels. The council also recommends a lower charge for shared trips, a surcharge on downtown trips to encourage transit use and reduce congestion, and an extra surcharge on Uber and Lyft if their drivers rack up a lot of miles returning without passengers from trips.
This article first appeared on CommonWealth Beacon and is republished here under a Creative Commons license.