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What will Quebec’s Uber deal mean for other jurisdictions?

The Quebec government’s Bill 100 kicked into effect at midnight September 8, after which point if negotiations between Uber and Quebec had not produced a workable result for implementing a proposed one-year pilot project, the ridesharing company had made it clear that it was prepared to fold its baseball glove and go home.

Last night, Uber and the province reached an agreement in principle on a pilot project that will allow the ride sharing service to continue to operate in Quebec.

An Uber driver named Arif, who told Le Journal de Montréal that he had been working 60 hours per week for the past six months as an UberX driver, said, “If I lose this job, I’ll be obliged to move to Toronto.”

Toronto’s loss is Quebec’s gain perhaps, and certainly Arif is breathing a sigh of relief this morning as he prepares to put in another long day driving for Uber.

Sticking points that had existed between Uber and the Quebec government during negotiations had been taxes and permits, with the government insisting that Uber should basically operate on the same playing field as the taxi industry.

As we’ve seen in Uber’s negotiations with other jurisdictions, it does not regard itself as a taxi company and has had occasional success convincing authorities to agree with that position.

Formally titled “An Act to amend various legislative provisions respecting mainly transportation services by taxi”, the bill would have put to an end Uber’s ride in Quebec if the two parties had not agreed to terms for a one-year pilot project by midnight.

The act affects other ridesharing-style services, such as Lyft or anyone else, but the only party locked in negotiations with the government last night was Uber.

If the midnight deadline had come and gone without an agreement, the Quebec government had made it clear that UberX drivers operating without a taxi permit would face fines up to $25,000 and risk having their vehicle impounded.

Taxi permits can cost as much as $200,000 in Quebec.

As of sundown on September 7, negotiations were not looking good.

Transport Minister Laurent Lessard was in Gatineau telling assembled media, “There were negotiations before I arrived. There was a proposal submitted by Quebec. Since then, we have been going in circles,” adding, “We are in a difficult period.”

The premier, however, was relatively upbeat on Wednesday afternoon, saying, “I remain under the impression that a deal is still possible, but time is passing. I know that conversations are ongoing. The company, if it really wants to demonstrate a desire to fit in Quebec, must do so in the direction that we’ve indicated.”

The Quebec government, for its part, has held a pretty high hand with Uber since it was formally declared illegal last year, with Montreal Mayor Denis Coderre weighing in heavily against Uber’s unwillingness to abide by any regulations other than its own.

Negotiations last night suggest that while Uber prefers to operate unregulated, and then threatens to leave town if its conditions aren’t met, the actual threat of shutdown by a jurisdiction that has reached a point of not caring whether it stays or goes leads directly to Uber accepting whatever terms are offered it’s offered, take it or leave it.

Taxes were one of the main sticking points during negotiations.

While Uber has always insisted that it pays its taxes, what that actually means at the point of sale is that the independent contractors who work as Uber drivers pay their taxes to the extent that they’re obliged to do so.

Freelance workers who earn less than $30,000 are not required to collect tax at source, which would mean that the vast majority of Uber drivers were not obliged to factor sales tax into fares.

Arif, for example, who works 60 hours a week, must certainly crack the $30,000 mark, and therefore must have been one of the few Uber drivers charging sales tax for each ride.

Terms of the deal changes that ad hoc sales tax collection practice, with the Quebec deal requiring Uber to collect taxes at the point of sale, in addition to a fee for “industry improvement”, and finally the real sticking point, drivers will need to have the same class of driver’s license that taxi drivers have.
How that all affects Uber’s famously low, low prices remains to be seen. Presumably, the added cost of regulation will be passed along to consumers, at which point the cost difference between riding an Uber and taking a taxi will likely be negligible.

The new law also requires drivers to undergo criminal background checks, take some customer service training and to have special plates on their cars.

Additionally, the small matter of Uber’s back taxes is not covered under the new agreement reached last night. Uber has never itself paid provincial or federal tax on fares. That is presumably still an open case between Uber and Revenu Quebec, representing a few years now worth of unpaid sales tax.
In April 2015, Uber’s office in Montreal was raided by Revenu Quebec to build a case against Uber for tax evasion.
Even though Quebec’s Uber deal is being described as a “pilot project” with presumably some kind of concession made to ensure that Uber remains a viable operation despite apparently agreeing to conditions that it had previously said it would reject, Lessard made it clear in the lead-up to the midnight deadline that there would only be one kind of permit for all taxi services, and not a special new category created specifically for Uber.

Uber Quebec representative Jean-Nicolas Guillemette said recently that any obligation for Uber drivers to operate by the same standards as taxis would sign Uber’s death warrant in Quebec.

Early Thursday morning, Uber was sounding a more conciliatory tone.

“In the days to come, we’ll have more to say about how this pilot project impacts riders and drivers,” said Uber Quebec General Manager Jean-Nicolas Guillemette. “For now, we want to thank all our supporters for all you’ve done over the past several months.”

While Uber has negotiated a patchwork of agreements with various levels of government wherever it operates, in this case it found a negotiating partner who essentially said, “Yes, we want you to stay. But you have to play by our rules.”

Quebec, unlike many jurisdictions, stuck to its guns and seemed prepared to accept Uber’s departure if the company found the province’s terms too steep to live with.

https://twitter.com/Uber_QC/status/773759108965081088?lang=en

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