'Triple taxation': Uber fighting 3% tax that supports NKY development

Uber is asking its Northern Kentucky drivers and customers to reject what it believes is a new 3% sales tax.

The recipient of that tax – an economic development group called BE NKY Growth Partnership – says the tax was enacted in 2022, with new legislative action this month aimed at clarifying who it applies to.

Either way, Uber has not been paying the 3% tax and is enlisting help to fight it.

“Our drivers and our riders should not be targeted to support this agency,” Javi Correoso, Uber director of public affairs, said of BE NKY. “We just think it’s a step too far.”

The San Francisco-based ride-share company urged its drivers – which it said numbers about 5,000 in the Greater Cincinnati area – to contact Kentucky legislators and ask them to reject the 3% tax. It made the same plea to Uber riders, declining to quantity that population for competitive reasons.

Correoso said Kentucky is practicing “triple taxation” – adding the 3% sales tax to a 6% tax created in 2022 along with a $3 surcharge on ride shares collected by Cincinnati/Northern Kentucky International Airport since 2015.

The 6% tax followed passage of House Bill 8, a spending measure that aimed to eliminate Kentucky’s 5% individual income tax in the coming years. The state then created new taxes on certain services to make up for the loss of income tax.

Uber has paid "just north of $6.5 million" to Kentucky since the 6% tax took effect in January 2023, Correoso said.

The 3% tax that Uber opposes was part of the 2022 bill, according to BE NKY. The tax was originally created in 1994 as a motor vehicle license fee, with House Bill 8 broadening it to apply to ride-share operators among others.

Earlier this month, the Kentucky House of Representatives passed an amended version of the 2022 legislation 73-11 with the Senate passing it 36-1 on Monday. The legislation is now headed for a conference committee.

The latest action cleans up language in the bill to make clear who the 3% applies to, said Lee Crume, BE NKY's executive director.

“Now everybody should be on board,” he said.

Crume said the motor vehicle license fee is essential to BE NKY, created as Northern Kentucky Tri-ED in 1987 to boost economic development in Boone, Kenton and Campbell counties and renamed in March 2023. The fee currently brings in about 67% of its $3.4 million in annual revenue, accounting for as much as 90% of its revenue in 2020.

Crume said Uber competitors Lyft and Turo have been paying the 3% since it was instituted. “They’ve never called us one time to say this is unfair,” he said.

Messages left for both operators were not immediately returned.

If Kentucky adopts an amended House Bill 8, Uber will pay the additional 3%, Correoso said.

"We will comply with the law but we also project this to negatively impact driver earnings in Northern Kentucky," he said.

He called the tax "counterproductive" for Northern Kentucky development.

"The message Mr. Crume is sending any business considering expanding in or to Northern Kentucky is clear: We are going to fund BE NKY ... by raising the cost of transportation for those who use Uber on a daily basis to get to work or move around the region."

This article originally appeared on Cincinnati Enquirer: What KY tax is Uber fighting?