Uber’s tax status slammed by Labour MP
Chair of the Public Accounts Committee and Labour MP Margaret Hodge has condemned the tax arrangements of the popular taxi app service Uber in a letter to London Mayor Boris Johnson.
According to Hodge, Uber has “unfairly undercut London operators by opting out of the UK tax regime". The Labour MP is unhappy that the Uber app is operated via Dutch entity Uber B.V., meaning the company is not obliged to pay UK corporation tax.
Hodge fears the arrangement has a negative impact not just on the public finances but the livelihoods of London cabbies and private hire vehicles. Transport for London (TfL) also came in for sharp criticism in Hodge's letter for "failing to apply the appropriate regulations" to the San Francisco startup. The letter implored the mayor to set out steps to ensure "TfL does not inadvertently allow tax avoidance in London".
However, Uber was quick to respond to Hodge's allegations saying that it "complies with all applicable tax laws, and pays taxes in all jurisdictions, such as corporate income tax, payroll tax, sales and use tax, and VAT." Furthermore, Uber said that it is a licensed PHV operator and comfortably passed the largest inspection records ever conducted by TfL.
Following June's protests against Uber, which saw close to 12,000 drivers in London and Europe taking part, many will fear Hodge's letter is the latest attempt to hamper the innovation being brought to the taxi industry, for the benefit of established interests.
The Adam Smith Institute's head of digital policy, Charlotte Bowyer, said:
The anti-Uber establishment's previous attempts to quash the company have all failed, so their new tactic is to play the tax card. This is a sign of an increasingly desperate industry. Allegations of tax avoidance sound serious but are unlikely to stick: it is not unheard of – or illegal – for companies operating in the UK to pay tax elsewhere.
Hodge falsely claims that Uber has negatively impacted the taxi and private drivers of London. In fact, Uber's innovative service has created a new segment of both casual taxi users and part-time drivers, growing the private transportation market and creating new opportunities for the drivers of London.
In July, TfL announced that, as far as it was concerned, Uber is acting within the law by using an app to calculate fares based on the time and distance travelled.
The London Taxi Drivers Association (LTDA) had argued that Uber is in breach of regulations governing taximeters, which can only be used by black cabs.