Uber, Lyft competitor busted not charging sales tax

A new ride-sharing app that advertised lower prices than Uber and Lyft launched in New York City over the weekend — but was forced to raise fares after admitting Tuesday that it was not charging some riders sales tax.

Co-op Ride, which has billed itself as an ethical alternative to Uber and Lyft, said that offering lower fares to some users by not charging sales tax was an honest mistake. The snafu comes days after the group received a favorable write-up in the New York Times on Friday. 

“We are looking into this and have contacted the tech provider,” co-founder Ken Lewis told the Post, adding that the co-op would pay any missed sales tax out-of-pocket rather than hitting riders with surprise charges.  “We will investigate.” 

On Tuesday afternoon, Co-op Ride offered a Post reporter using an iPhone a $29.14 ride from the Metropolitan Museum of Art to City Hall. The fare included a $0.77 black car fund charge and a $2.75 congestion fee — but not the required 8.875-percent local and state sales tax. With the taxes included, the ride would have come out to about $31.72. 

A car with Uber and Lyft signs
Co-op Ride says it will allow drivers to work for it as well as Uber and Lyft.
Education Images/Universal Image

Nevertheless, Uber and Lyft asked $42.78 and $40.97 respectively, including tax, for the same ride — meaning that Co-op Ride still would have been the cheaper option.

The Co-op Ride app was created by New Jersey-based software firm Limosys, although Lewis told the Post that the co-op is also developing its own software with volunteers from Facebook, Google and other technology companies. 

The app is run by a group called the Drivers Cooperative that was founded by Lewis, who is a a former black-car driver, as well as former Uber East Africa operations manager Alissa Orlando and self-proclaimed “social(ist) entrepreneur” Erik Forman. 

The group says it takes a smaller chunk of fares than Uber or Lyft, resulting in higher pay for drivers and lower fares for riders. And while Co-op ride wants to take market share away from Uber and Lyft, its drivers are allowed to drive for any ride-sharing service. 

An Uber car
Despite the tax issue, Co-op Ride says it can offer lower prices than Uber or Lyft.
Getty Images

Lewis said that he was inspired to create the ride-share service, which currently has about 2,500 drivers, after thousands of Uber drivers were left without work during the pandemic and had difficulty collecting unemployment benefits. 

“Uber and Lyft and the ride-share space has been really hard on drivers,” said Lewis. “Our model is one that will be driver-centered and we expect that to bring benefits.”

Co-op Ride did not charge sales tax in several other routes tested by the Post. 

At around 3:30 p.m. on Tuesday, Co-op Ride offered a $51.15 ride from Times Square to JFK Airport, which would have come out to $55.69 with sales tax included — far less than the $96.83 and $124.99 requested by Uber and Lyft respectively. 

Co-op Ride’s launch comes as wages for Uber drivers have surged. Uber spokesman Harry Hartfield recently told the Post that the median New York Uber driver is currently making $38 per hour as a shortage of drivers has driven up wages.

Hartfield declined to comment about Co-op Ride. Lyft did not immediately reply to a request for comment.