Analysis, Part 3: What About the Poor Taxi Drivers?

This is the third of a series of stories looking into the severe failings of taxi service in the territory; how the wildly out-sized influence of the taxi lobby has brought us here, and what needs to happen. The first two parts can be read here and here.

Taxis line up for business on St. John. (Photo from the V.I. Taxi Association website)
Taxis line up for business on St. John. (Photo from the V.I. Taxi Association website)

If Uber and Lyft are allowed in the territory, what happens to the taxi drivers? What happens to the value of a taxi medallion?

First, the move should ultimately help taxi drivers. After all, taxi drivers could also sign up to be Uber drivers or use a locally-based app. Instead of sitting around playing cards at the airport or in Christiansted or Charlotte Amalie, hoping someone walks up and asks for a ride, they could be anywhere and get a notification that someone out at Emerald Beach or Cane Bay or Cruz Bay needs a ride. And if tourists could use these apps they would, greatly increasing the number of rides being purchased.

Everyone would win.

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In some places, New York City for instance, the taxi industry really has seen financial pain due to competition from Uber and Lyft. Taxi medallions lost value as a vehicle for financial speculation. Some studies say ride-share drivers cannot make a living. Although the tens of thousands of people voluntarily choosing to be ride-share drivers in a booming, low-unemployment economy seems to fly in the face of that assertion.

Still, there has been some suffering in the adjustment. V.I. government officials say as much as 80 percent of V.I. taxi drivers lease their medallion from a speculator. Those speculators might see the value of their investment go down.

Speaking of pandering: not long ago, senators made it easier to speculate on taxi medallions, claiming it would help valorous veterans hurt in war, and bolster the “industry” of renting medallions out to drivers.

Someone will try to delay or prevent ride-share apps coming to the territory by arguing it is unfair to taxi drivers or by raising the specter of a lawsuit. We will likely hear that medallion speculators are valorous, patriotic veterans who might have seen combat. That they are hard working, good, decent people.

Yes, taxi drivers are fine people. They, like everyone, need jobs. But the change will likely help, not hurt them. They too can get more passengers by being Uber drivers too. And taxis will still have some special privileges. Only taxis can pick up fares off the street.

On St. Thomas, taxis already compete with hundreds of unlicensed gypsy cabs. That underground and sometimes sketchy market would promptly dry up if visitors could use phone apps to arrange safe rides by certified drivers.

More importantly, the taxis’ special interest needs to be weighed against the urgent need to bring this vital service that every other tourist destination is able to provide and the pathetic failure of V.I. taxis to provide anything close to a normal level of taxi service.

Medallion owners and taxi drivers in New York, Minnesota, Massachusetts, Georgia, Illinois and other states sued to stop Uber and Lyft, arguing that allowing ride-sharing apps illegally takes some of the value of their medallions. They lost. Court precedent is very much on the side that those speculating on taxi medallions do not have a right to government support of the value of their investment and taxi drivers do not have a right to protection from competition.

In 2016, the U.S. 7th Circuit Court of Appeals ruled against Chicago taxi drivers and medallion owners and in favor of ride-sharing services. The U.S. Supreme Court declined to take the appeal, making that decision the final say, at least for that part of the country.

“Taxi medallions authorize the owners to own and operate taxis, not to exclude competing transportation services,” the court wrote.

The plaintiffs in this case cannot exclude competition from buses or trains or bicycles or liveries or chartered sightseeing vehicles or jitney buses or walking; indeed they cannot exclude competition from taxicab newcomers, for the City has reserved the right (which the plaintiffs don’t challenge) to issue additional tax medallions. Why then should the plaintiffs be allowed to exclude competition from Uber? To this question they offer no answer,” the opinion continues.

These arguments apply perfectly well to the local situation. Clearly the Legislature could act to clarify that ride-sharing apps like Uber and Lyft are legal in the territory without any hurdles beyond taxi driver opposition.

But senators will have to buck the taxi drivers. It will be interesting to see what is more important to senators: the good of the entire territory and its economy, or the narrow, short-sighted wants of one small interest group.

Tourists not being able to reliably get from one place to another or get back to their room after a night on the town is stifling the crucial tourism economy. For the good of the territory, it is crucial the Legislature act.

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8 COMMENTS

  1. There’s an article in another online local publication that lists the various reasons Uber is not viable in the VI. I suggest you read it.

    Someone tried to start a local ride sharing app and had advertised on at least one online employment site. I never saw it get off the ground.

    More and more visitors rent vehicles instead of relying on taxis. Uber isn’t the only transportation option for public use.

    Uber and Lyft drivers recently went on strike to demand higher pay and a benefits package. How does Uber get away with classifying their drivers as contractors when Uber controls the driver’s compensation rates? The only control drivers have over their income is by driving more.

    You can’t drive for Uber with an “island car”. There are strict requirements for the vehicle that will disqualify many of the cars from Uber.

    Many visitors and locals use gypsy taxis. Major US areas with successful Uber operations isn’t a model that can be replicated in the VI. The solutions, if there are any, require looking at other successful operations worldwide and see if/how they can be guide the VI to a solution.

  2. If gypsy cabs are allowed to function here, then how is Uber/Lyft any different? So, if one wants to do this, then buy an Uber/Lyft-approved car, sign on and do it. Who is going to police this? Is there fear of threats from the taxi mafia? Nothing worthwhile was ever done easily. Come on! Just DO IT!

  3. “Court precedent is very much on the side that those speculating on taxi medallions do not have a right to government support of the value of their investment and taxi drivers do not have a right to protection from competition.”
    Will the Senators bow to the special interest group or act for the good of the territory and the people? Well we know the answer to that!

    • You go That right!Uber and Lyft will weed out the gypsies.Doesn’t anyone have business sense?Have the licensed taxi drivers ever been audited?Can The IRB compare the mileage of the vehicle in relation to the income claimed?Uber and Lyft deposit the driver’s earnings weekly into their account.That is easily verified by the IRB and the obligatory taxes will be billed.We all know the gypsies pay nothing in taxes since they are illegal by definition.

  4. One other thing-when reading the headline of this article, I was hoping the tax laws related to taxis (medallion-owning) would reveal the actual taxes that are required of them. I believe they have a sweet deal which was negotiated by former senator Celestino White. It would have been nice to see what they are actually required to report to IRB. I see lots of huge homes with many electric meters (apartments), where taxi drivers live. It would be interesting and telling to see how they could afford to build these monstrous concrete ($$$) dwellings on a dollar-a-ride salary, not to mention the high price of the medallions. If one wants to investigate anything or anyone, the first step is to “follow the money.” It’s time to break up this self-serving, special-interest group.

  5. Was thinking the same thing. Cash business, no receipt, no accountability. Wasn’t the senators planning on passing a bill to stop all cash businesses? Additionally, Look at the amount of safaris parked outside the projects at night !! Are IRB and government agencies blind, stupid or just out right crooked as the taxi drivers? They cry and cry and cry how life is so hard for taxi drivers and they don’t even pay their fair share of taxes. Imagine if they did? There should be no cash exchanges. Just credit cards like in PR and mainland for taxis. It should be law for all, “only cash” businesses. Unfortunately, that would affect too many politicians , their families, friends and partners in crime. It’s time to have a heavy hand and do what’s best for our island and it’s people instead of individual groups and associations. Taxi drivers are just a drop in the bucket when it come to tax evasion, money laundering and out right manipulation of the free federal assistance programs. They know how to beat the system. While we work and pay taxes , they are studying how to beat the system. Shameful and we allow it to happen.

    • I always appreciate your analyses of the issues. You’re very astute in your observations. I hope you continue to care enough to comment, especially since the MO around here is to wear everybody down until they either give up and move away, or die.

  6. You sound like my father. He always says “I will fall, I will fail, and I will falter but I will not surrender. “ Thanks for the positive words. Your last sentence made me laugh. Thanks for the laugh.

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