Uber says ‘report has no basis in reality’
The federal government needs to ensure companies like Uber and Lyft don’t get a free ride on taxpayers, a new Canadians for Tax Fairness (C4TF) report says.
The report estimates Uber and Lyft are able to avoid paying about $135 million a year in Canadian taxes which includes $81 million in Employment Insurance (EI) and Canada Pension Plan (CPP) payroll taxes and up to $54 million in corporate taxes.
Report author Dr. D.T. Cochrane said the two firms are designated as digital services rather than transportation companies and employers, allowing them to avoid EI and CPP and shift the burden of collecting GST/HST to their drivers.
Based on profit estimates for Canada in 2019, the companies would be required to pay about $54 million in corporate income tax but there is no information on what they actually put into government treasuries, the report says.
“These companies are thoroughly dependent on all sorts of publicly funded infrastructure and publicly funded services,” Cochrane said Monday. “And they don’t to our knowledge contribute anything towards that … Uber and Lyft couldn’t function if the government wasn’t maintaining our roads systems.”
This approach has allowed them to under-price and undermine private taxi and public transit providers, the report says.
In a statement, an Uber Canada spokesperson said the company is committed to building a sustainable business in the country and is compliant and remits all the tax required under Canadian law.
“The C4TF report has no basis in reality, and we refute its findings,” the statement says. “In addition, Uber contributes millions of dollars in the form of ridesharing fees, which help local and provincial governments pay for ridesharing, transit and other initiatives.
“We’re proud to offer our platform in nine provinces in over 140 municipalities, providing flexible earning opportunities for drivers and delivery people, support for restaurants, and convenient and reliable ridesharing and food delivery services for Canadians,” the statement says.
A response from Lyft was not immediately available.
While their activities are not illegal, these companies should be required by the Canadian government to treat their drivers as employees and to provide more transparency about the taxes they are or aren’t paying, Cochrane said.
“Uber, in particular, has proven to be a master in using transnational tax differences to lower its tax bill,” he said.
The report also calls on the Canadian government to ensure that its proposed digital services tax applies to Uber and Lyft.