Uber, valued at $40 billion, has taken the ride industry by storm, with cities and industries scuffling to figure out how to exactly handle this new innovation. It has been a spirited reply to Uber, with some loving the service and others hating it. In Mexico, just as everywhere else in the world, government, taxi services, workers and passengers are all making the adjustment to the new possibility.
One such party that hates the new service are Taxi drivers. In Mexico City they have protested for four months the ride-sharing service Uber. Last week, Mexico City became the first city in Latin America to regulate ride-sharing apps. The government issued a list of rules for Uber drivers on Wednesday, July 15, such as a 1.5 percent tax, a yearly permit fee and a minimum vehicle value.
The 1.5% levy is meant to generate revenue and create a Fund for Taxis, Transportation and Pedestrians. Drivers have two weeks remaining to pay Mex $4,617.50 (US$290) to register with the capital’s Transport Secretary.
Vehicles must have an original value of no less than MEX $200,000 (USD $12,650), four doors, air bags, radio, air-conditioning system and seat belts for all passengers. Drivers must also pay MEX $1,599 (nearly US $101) for an annual permit on each vehicle used for this service.
Uber likes the decision. Mexico City’s Uber representatives said the new regulation “makes Mexico a pioneer in recognizing, in law, that supply should respond directly to demand and the free choice of consumers.”
However, local taxi drivers believe rules for ride-sharing apps should be more stringent, with Union leader Rubén Alcántara contending the rules demonstrate a “lack of respect” towards Taxi drivers and that they plan to go on strike. The base fee for Uber in Mexico City is currently $7.25, with $2 charged per minute, and $3.50 per kilometer. (July 2015)
According to Corey Owens, Uber’s pubic policy directory, the levy is on the “high end” compared to what it pays in other cities, which includes a 1 percent charge in Washington D.C. Mexico City represents the largest city in the world now regulating Uber, and has 140,000 traditional taxis.
South Korea has not made a decision on how it might regulate Uber, having asked the company to stop operating until Uber-specific legislation and regulations can be drafted. Uber has itself chosen to stop operating in places like Panama City Beach, Florida due to pressure by unwelcoming city officials and climates.
In other places the service remains online, such as in South Africa where police impounded 34 Uber vehicles for illegal operations. In Germany ride-sharing services are totally banned unless they get a taxi license. Uber plans to buy the commercial licenses for its driver. In California, the California’s Labor Commissioner’s Office decided that one of Uber’s drivers should be defined as an employee of the company and not an independent contractor.
“This ruling—if it stands—could force Uber out of California,” James Sherk, senior policy analyst in labor economics from The Heritage Foundation, told . “Uber drivers use their own vehicles, set their own hours and are free to work for competitors like Lyft at the same time. Under federal law that makes them independent contractors.”
Uber has appealed. In five other states it won this same case, though California law does state that employers must reimburse employees for business-related expenses. Should the company lose, minimum wage and overtime would be demanded along with employee benefits. Uber would also have to control its driver’s schedule. “It destroys Uber’s business model,” Sherk said. “I would expect them to leave California rather than comply.”
In the US, and around the world, Uber is being seen as a TNC or a transporation network company, which merely connects passengers and drivers via software. The term appeared in California when that state passed its first ride-sharing regulations in September 2013. In Colorado, TNC’s must insure up to $1 million in liability insurance which Uber already covers.
California wants to require the company to provide insurance whenever the driver has the application turned on. In Illinois’, ride-sharing laws passed in May 2014 demands TNC’s show a photo of a driver and fare estimate in the app and deliver an electronic receipt. Portland wants ride-sharing services to offer new services like wheelchair accessible vehicles.
Uber has pushed cities to pass laws in shorter periods of time in the new cities. In the 18 US cities where Uber is now legalized, 10 passed the ordinances in four months in cities like Seattle and Washington DC, where Uber has been in service for years.
There are options other than Uber in Mexico City, such as an app called YAXI, which works basically the same way as Uber. A YAXI driver, unlike an Uber driver, will likely take longer, since there are fewer of them. Another option for a ride are, of course taxis. Sitio Niza is a reputable sitio de taxi which functions much like any other taxi in any other city.
All-in-all, it seems Mexico City has taken a liberal approach to the regulation of Uber now and potentially in the future. It offers, while potentially high fees, no bans or limits that could outright spell the end of the service in the city.
[Editor’s Note: Thinking about checking out Uber in Mexico City? Start planning by clicking here]