[vkou]

The fact that they weren't paying GST is mind-boggling. The purpose of the exemption is to let someone running a tiny hobby business sell their products without having to deal with tax headaches.

The purpose of the exemption was never to let a mega-corporation take the exemption of each employee, multiply it by the number of employees, and pretend that they don't need to pay tax.

What next? A grocery store taking the $30,000 exemption for each employee working for it? A law firm taking a $30,000 exemption for each legal aide working on a case?

[kazinator]

Yes, in fact that is how it works. If multiple independent contractors work for some firm, they each get their 30,000 exemption (if eligible) as individual sole proprietors of their individual businesses. They have their own business numbers and GST accounts which are considered individually.

Contractors are considered employees in some ways and not in others. This is mainly under labor ("labour", here in Canada) law which is there to protect workers from being exploited by being reclassified as contractors. Like you can't ask people to work in shit conditions just because they are contractors, and such, or deny them a lunch break.

[graeme]

The firm still collects GST though. It just doesn't need to pay GST to it's contractors. In practice, the firms net finance shouldn't be different regardless of whether they have employees or exempt contractors.

Consumers contract with Uber, and pay Uber. So from what I can see, Uber should be collecting, for itself.

[qeternity]

Fine, so knowing this, Uber collects GST and reduces the fare by the offsetting amount. In one pocket and out of the other. It's purely optics.

[run4yourlives2]

Except for the fact that the GST gets remitted to the government, instead of to Uber. Your suggesting is an 5-17% reduction in margin, dependent on province.

Either way, collecting GST on a sale is the norm in Canada, regardless of what happens on the back end.

[qeternity]

Read the parent:

> So from what I can see, Uber should be collecting, for itself.

My comment is not about remitting, it's about collection. Jesus.

[run4yourlives2]

I don't think you understand how this works. I can charge you $10 for a candy bar with GST included and make $.95, or I can charge $10 + 5 cents gst and make $10.

It's not at all the same thing as you previously suggested.

The entire point of this conversation here is that $10 + 5 cents gst is a price increase if you weren't bothering to charge a tax at all.

[graeme]

It's not purely optics. It's either an increase in Uber's prices, or a decrease in their margins.

By "collecting, for itself" I meant "for itself as the seller" rather than "collecting on behalf of its contractors"

[branchless]

21st century capitalism: gaming the system rather than actual productivity improvements that make lives better.

[yazaddaruvala]

Ok, you can fault Uber for TONs of things. Moral, financial, ethical, political, legal, but one thing they did indeed do is provide "actual productivity improvements that make lives better".

I am an Uber/Lyft user and my life has been drastically improved!

[danielhooper]

Speak for yourself. Uber has for me been a service superior to what taxi companies offer in literally every way possible.

[branchless]

Of course they are, they have less overheads because they game the system.

[thrill]

Uber drivers are not employees. They are independent contractors. Uber, as part of their service, collects money from riders, giving both the rider and the driver a comfort factor as they don't have to deal with cash. As "hobby" businesses they each individually were enjoying the exemption. Now they will not - because we can't have "hobby" businesses causing discomfort to the well connected.

[peeters]

If it quacks like a duck, it gets taxed like a duck. Uber has made a business out of exploiting legal loopholes. They know it, their users know it, the politicians know it. It's just been a race to close them. I have no sympathy for Uber in this. They obviously provide a valuable service to people, so I'm sure they'll survive. Now they'll just be competing on an even playing field.

[narrowrail]

I used to work for Landstar[0], which operates in a very similar way to Uber, but in the trucking industry. The company has been around for almost 30 years and the drivers are considered Owner-Operators[1] (i.e. contractors). I was under the impression that an Uber driver could choose not to take any given fare(just like our truckers could). There seems to be some irrationality when it comes to Uber among my fellow engineers, and I can't figure out why.

[To be clear: I've never used Uber nor would I generally consider it over my local 'trolley' in the ~35K population town in which I live.]

[0]https://en.wikipedia.org/wiki/Landstar_System

[1]https://en.wikipedia.org/wiki/Owner-operator

[frgtpsswrdlame]

Imo the contractor designation should be limited to people who have pricing power for their work. Uber drivers have none.

[narrowrail]

I think that's a somewhat fair comment, and a t0pic worthy of discussion. According to wikipedia[0],

In economics and particularly in industrial organization, market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost. In perfectly competitive markets, market participants have no market power.

I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no? We always tried to manage our drivers for an elastic supply of capacity (much like an ad exchange). Otherwise, we'd be overwhelmed like the under-covered transport problem in Austin during SXSW (I believe a result of the lack of Uber availability). Uber's radio adverts explicitly state that it's "drive when you want for extra money," and if that is not what they actually offer then Lyft has a huge opportunity to acquire/retain more/better drivers and maintain a rapid ability to scale for capacity.

I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US (I don't actually care if Canada bans Uber altogether, for example, I am more interested in the concepts themselves), and maybe a total rethink about how to organize labor.

I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.

[0]https://en.wikipedia.org/wiki/Market_power

[frgtpsswrdlame]

The important part is this: market power is the ability of a firm to profitably raise the market price of a good or service over marginal cost

The driver does not raise the price, Uber does. Uber has the market power here.

>I'm pretty sure I don't have the exact facts on what Uber's operating agreement with drivers is, but I always thought a given driver could choose to only drive during surge pricing, no?

Perhaps, I should have been more direct. A contractor should be able to set and negotiate rates. If they can't do that I think they're an employee. For example, if I need to hire a general contractor for a construction job I can shop around, compare rates, pick the best one AND haggle with them if need be. If I need to hire an Uber, I have no "haggle-power" OR ability to shop around because Uber sets the rate. None of the contractors are competing against each other because Uber controls the marketplace and this is where I think the contractor designation breaks down. If you tightly control the market, the people in it are employees, if the market is more free, the people in it are probably contractors.

>I am of the belief that Uber presents a unique opportunity to rethink the whole structure of unions in the US, and maybe a total rethink about how to organize labor. I would have interest in building a commercial platform to help labor organize and coordinate themselves better (that they own) in the modern world. I think it would look like a gated digital community with microblogging, discussion, and voting functions.

This sounds interesting but personally I'm of the mind that poor labor organization is a political problem. How would your app help workers beyond just a place to communicate?

[gshulegaard]

Technically, having the option to decline fares is a form of pricing power.

[ubernostrum]

In the US, at least, the employee/contractor difference is based on a number of factors, but one important factor is the level of control over the person doing the work. If you're setting their working hours, or deciding which jobs they'll take or how they'll do them, or setting their wage/pricing for them, etc., those are things which point toward the "they are an employee" side of the spectrum.

[lazyasciiart]

But it isn't that straightforward, because your can have a 10x ninja developer who works whenever they want and picks their own projects, but is still an employee.

[tholmes]

That's not a problem. The point in the tax code is to prevent offloading the tax liability by classifying people who are rightfully employees as contractors instead.

I'm reasonably certain the tax code has no regulation that says you must be classed a contractor if you meet certain criteria.

[zht]

if the Landstar drivers refuse too many fares are they banned forever from the system?

[narrowrail]

Not officially, but I'm sure it was happening. Each individual Landstar broker operates independently as well, so if a given driver is constantly saying no, I am certain the broker would stop calling that driver (or at least put them further down the list). It was obviously a more 'manual' and distributed process, that started in the 70's with companies like Dial-a-Truck:

https://en.wikipedia.org/wiki/Dial-a-truck

These systems morphed into what is called a 'load board,' and Landstar operated what was more of a network of independent trucking brokers with their own shared/ private load board.

[charlesdm]

Sure. No problem. They've used loopholes for the last 4+ years, which is fine. Given they still have a massively superior service to taxi's, now let them compete.

[AndyNemmity]

They used to have a massively superior service to taxis, until taxi drivers started to work for Uber. The quality has dropped dramatically.

[wavefunction]

Maybe working for Uber became more like driving a taxi... dun dun dun

[jimmywanger]

You're missing the main point of the argument. It's not a loophole.

There are a certain number of criteria for employees vs contractors, based on whether training/equipment is provided, price setting, ability to turn down jobs, etc etc.

If you're classified as an employee, there are a bunch of things you have to do, such as collect GST, deal with health care, sick days, paternity leave, taxes, etc.

Uber is making the case that its drivers are contractors, since they set their own hours and purchase and maintain all their own equipment. It's a plausible argument, and that's something for the courts to sort out.

Just saying that they need to collect GST because the drivers are employees is begging the question.

If Uber drivers are classified as employees, what's next? Upwork and eLance workers classified as employees?

[rdiddly]

They need to collect GST because a Good or Service is being provided and that's what the Tax covers.

[jimmywanger]

You're missing the point, and begging the question.

If the good or service is being provided by a non-taxi contractor who makes less than 30k a year, then you don't have to collect the GST and the tax doesn't cover that.

If the good or service is being provided by Uber, a non-contractor who makes over 30k a year, then you have to pay the tax.

What we're debating here is who provides the service and their legal status.

[rdiddly]

I'm deliberately ignoring your point actually, because it's moot. The law is being changed to eliminate your first case (independent small suppliers) and declare those services to have been provided by a single entity (Uber). Both sides of your debate are now one.

There's a certain amount of circular reasoning inherent here, because a government ministry made a declaration. It's not just an objective observation of reality, it's a declaration of what that reality will be henceforth.

Was it a good decision? In my opinion yes, because it better reflects the original intent of this particular tax. Anyone trading on the brand-name of "Uber" and using Uber's infrastructure is not a small supplier (who has to build and market their own brand and build their own infrastructure). And they are clearly supplying a good or service, which was my point expressed in embryonic form above, so they can go ahead and collect the tax.

[jdmichal]

OK, lets take as granted that the service is actually being provided by the drivers and not Uber, who is just acting as a facilitator of the payment. I would still argue that they should have owed taxes all along, because even in that case they are providing a service. It's just that the service they are actually providing is to the drivers -- matchmaking and payment collection. So the cut they take from the drivers should have been taxed all along.

[boona]

>Uber has made a business out of exploiting legal loopholes.

I find that kind of argumentation silly. They brought to the taxi industry, what is common in other industries, like construction, tech, etc. Stated differently, Uber has been able to provide a competitive service by legally structuring themselves in a way maximizes return for the themselves, for the driver, but still keeps costs low client due to say structuring.

[peeters]

They brought everything they could. I'm not criticizing them for that. Taxi companies didn't even have apps 5-10 years ago. But a ton of what they have been doing obviously goes against the spirit of the laws they're leveraging. The GST loophole is a perfect example. It's meant to allow tiny businesses to avoid the paperwork and overhead associated with collecting GST. But Uber would be doing all that overhead for their "employees", since they broker all of the fee collection. So the employees wouldn't have to bear that cost anyway. Why should they be exempt then?

[boona]

I'm still not sure how that's considered a loophole. The people who work for them are in fact small business operators, and it most certainly does simplify the process for them not having to pay for GST.

Is your argument that you wish they had structured it differently so they were forced to pay more taxes? If that was the case then the drivers would be making a less, and the passengers would pay a more to cover the costs of the GST, and I don't see the point in that.

If taxi companies want to level the playing field, why don't structure themselves in more innovative ways like Uber did instead of forcing others to pay more taxes?

[slavik81]

The GST is supposed to apply to just about everything equally, with a few exceptions. If you want consumers to pay less GST, vote for a government that will reduce it, as in 2006.

The government is doing exactly the right thing in changing the law so that irrelevant differences in corporate structure don't affect the tax paid.

[_jal]

> Uber has been able to provide a competitive service by legally structuring themselves in a way maximizes return for the themselves, for the driver, but still keeps costs low client due to say structuring.

In fact, they haven't. They're taking a huge loss on subsidies to the fares.

[sten]

That the maximum is a loss doesn't negate it's place as the maximum. They could do worse for themselves. A house could burn down faster.

[_jal]

Of course. I was pointing out that they are not keeping costs low. They are just unsustainably subsidizing them.

[briandear]

There is no such thing as a loophole. The law is the law. Isn't every tax deduction really just a loophole? It's every company's fiduciary duty to minimize expenses using any legal means at their disposal. It's idiotic to criticize a company for using the law to their advantage. There is nothing stopping a competitor from doing the exact same thing. The law applies equally to everyone. It isn't Uber's fault taxi companies have structured their businesses the way they have.

[peeters]

Yep, the law is the law. Which is why the government is changing the law instead of just complaining loudly.

[enraged_camel]

>>There is no such thing as a loophole. The law is the law. Isn't every tax deduction really just a loophole?

No. A loophole is when a given law is exploited in a way that was not intended by the people who wrote it, usually by resorting to small technicalities in the law itself, or by referring to other, related laws.

In this particular case, a law that was intended to benefit small businesses is being exploited by a mega corp. Hence, loophole.

[wastedhours]

Isn't it technically incorrect it's their fiduciary duty to minimise expenses? As long as a company has a rationale for their decision (with negative PR from tax issues being a legitimate one), there's no onus on them to hunt loopholes out.

[charlesdm]

Uber had a special use case, which allowed them to claim certain tax benefits. These have now been adjusted in Canada.

[madeofpalk]

Naa, that's bullshit.

I download the Uber app, Uber finds me a ride, Uber sets the price, Uber charges me, and I pay Uber. Uber should be collecting GST/sales tax. I don't understand how else you could look at it!

Uber is essentially doing the same thing here in Australia and the courts are getting involved to make a ruling.

[dalbasal]

This is, IMO, the best way of looking at it. Whether or not Uber's drivers are employees is a completely separate matter and your point stands regardless.

The consumer is paying Uber. Whether Uber uses employees, contractors, clockwork automatons or aliens to provide their service is irrelevant.

[anomaly_]

It's a little different in Australia. The GST registration threshold is $75,000, but there is a specific carve out for taxis that forces registration/collection of GST for taxis regardless of turnover. The ATO (and now the Federal Court) aren't challenging the contractor/employee position of Uber - rather just that the individual drivers should be collecting and remitting GST on their fares.

[jimmywanger]

The same thing applies to Manpower or any temp agency.

"I call manpower, manpower sets the price, manpower charges me, and I pay manpower!"

Except in that case temp agencies are clearly employing contractors, and thus don't have to pay GST.

Not everything is black and white. If they were, the government would easily have been able to block their actions. Right now they're trying to figure out what's going on and charge them appropriately.

[foobar1962]

The Australian GST legislation specifies that taxi drivers MUST be registered for GST regardless of income.

[vkou]

If I staff my grocery store with contractors, can I claim a $30,000/contractor tax exemption too?

The intent of the law is pretty clear - serious businesses (That do more then $30,000/year in sales) are expected to pay taxes. Small ones are not - because of the small amount of tax revenue, and the high burden of compliance for individuals.

The cost of compliance for Uber is trivial. It's a bloody app, for Pete's sakes.

[BillyParadise]

Agreed re. contractors. When you use the Uber app, you pay Uber. Not Joe Shmoe and his nice newish car. Therefore the HST should be payable, to Uber.

In turn, drivers who earn > $30k should provide their HST number to Uber, and Uber should be billed HST in remittances.

In turn, drivers can write off HST paid on all business-related expenses.

Yay, Value Added Taxes.

[basch]

Stripe, Square? What makes Uber different from payment processors with built in fraud protection layers?

[madeofpalk]

Consumers never buy anything from Stripe or Square.

Consumer buy ride services from Uber.

[briandear]

So Etsy should be charging GST and every other marketplace app out there. Uber is a broker not a transportation company. Other than their self driving experiments, they don't operate a single car.

[adrr]

Uber controls the cost of goods/service.

[Svexark]

When I buy a book from Amazon, I pay Amazon, not the seller. Therefore, the seller is an employee of Amazon.

[kazinator]

Right, so if you buy a book from Amazon, and then pay your credit card bill a month-something later, that means Amazon and the seller are employees of Visa. Wherever the end-user sends money is the employer; that's it.

[ribosometronome]

When you buy a book from a seller on Amazon, who sets the price?

[thaumasiotes]

Just as you'd expect if Amazon was a physical bookstore - the store sets the price. Did you think authors were employees of Barnes and Noble?

[Anderkent]

Very often Amazon

[scosman]

They already support collecting HST (drivers who make more than $30k have to). Occasionally I take a ride and see HST on the receipt, but most are dodging it.

[stormbrew]

Can your grocery store contractors come in whenever they want, wear whatever they want, use whatever till software they want?

[kazinator]

Can a building contractor wear whatever they want, like a ball cap instead of a hard hat and sneakers instead of steel toe boots?

Can a software contractor code in any programming language and on and operating system, whether or not the client uses them? Can he or she flout the HR policies, while on site?

[stormbrew]

There are regulations about what people involved in construction have to wear while they're working. It's not the contractee's sole discretion in that case. But if you're an independent building contractor and you want to come to work in sequined coveralls then sure?

A software contractor can indeed work in whatever they want, but the contract may stipulate some things about that and not doing so would be breach of contract. Obviously a contractor is bound to the terms of their contract.

In this case the analogy is the contractor using their own computer and software to manage their work process, not terms of what the work product is.

Likewise, if they're not an employee and their contract doesn't stipulate anything about behaviour on site than I would expect them to follow the law rather than policies they never agreed to... Is everyone entering a workplace subject to HR rules they've never even seen?

For reference, the things that I was vaguely referring to are described in detail here: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html#facto...

[vkou]

Sure, but I'll only pay them for the minutes when they are checking out a customer.

[thrill]

Should you not be able to?

[vkou]

The Canadian Revenue Agency seems to think that I should not do that. They also seem to think that traditional taxi companies are also not eligible for this exemption.

[LammyL]

That is right. The law in Canada explicitly excludes taxis from the $30k exemption, and taxis must collect gst/hst on all rides, regardless of how much the taxi's sales were in a year. Uber was exploiting this rule by saying their services weren't 'taxis', and each driver was independent, and therefor that rule didn't apply to them. It's a sneaky way to charge most people 5-15% less than their taxi competition.

[stormbrew]

Source on the CRA not allowing cabbies to be contractors? Because as far as I know they almost universally are. Either to the owner of the cab they drive or to the dispatcher.

[recurrie]

It's not that CRA doesn't cabbies to be contractors, its that they require all taxi drivers to register for and collect GST/HST- taxi industry does not qualify for the sub-$30K exemption. The reason for this was that otherwise, there were fears from full-time drivers that part-time drivers, making under $30K/year, would be favoured by customers over full-time drivers.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/txlmsn/menu-e...

[kazinator]

If cabbies are contractors, there is still the question of who handles the rider's money.

I'm a software development contractor myself. But I don't handle the revenue of the company or companies I work for, from their customers. So the GST on that revenue is none of my business at all.

Similarly, a cab company could operate such that cabbies are contractors, but the company collects the fares, and then pays the cabbies out of that under whatever compensation terms are between the cabbies and the company.

In that case, since the company is not a small operator meeting the 30K-and-under rules, it has to collect and remit GST.

Some of the drivers might meet the rule themselves. They bill the company with their invoices and do their own GST accounting. Those that work a lot charge the GST. Some that work only little can get away without it. Either way, that makes no difference to the cab company. When that company is charged GST by a contractor, it can probably subtract that from the GST it collects and remits as a "GST input credit". When it isn't charged GST, it doesn't subtract.

Either way, the company can get the contractors "GST free". This is fair when we consider that a company with permanent employees also gets them "GST free".

The "GST cheating" in Uber is probably that the drivers themselves are not just considered contractors, but entire one-person transportation businesses which collect revenue directly from the riders. Effectively, each Uber driver is an entire one-person cab company operating one cab. Uber is then their supplier: they pay something to Uber for the services of being in the Uber network.

If there are large numbers of part-time Uber drivers that meet the 30K exemption, then that's a big loss of potential GST revenue to CCRA, compared to if those drivers were contractors who get paid by a cab company that itself collects fares with GST (even with the input credits they may get). When a driver meets the exemption, the CCRA gets no GST whatsoever from that piece of the pie: not even the difference between GST on some sales, and input credits with respect to the driver associated with those sales

[jacquesm]

> Uber drivers are not employees.

This is Canada. I'm sure that's how Uber would like to see it but not everybody agrees:

http://business.financialpost.com/news/transportation/uber-d...

[stormbrew]

Ironically, this is something cab companies probably don't want. It'd be cutting off their nose to spite their face. Most cabbies are also contractors and in fact pay to use the cabs they drive on a daily basis.

It would wreck the cab industry if dispatch companies (to which cabs are exclusively tied) had to make all their drivers employees.

[makmanalp]

And good riddance, the cab industry has long been problematic in its own way, with its own worker abuse issues and non-competition problems. Disliking uber doesn't mean supporting cab medallion owners.

[seanmcdirmid]

This would basically mean the end of taxis and uber. Just mass public transportation and guys running everything by themselves would survive.

[makmanalp]

Am I honestly to believe the tech industry can shoot a rocket into space and do any number of miraculous things, but can't create a solvent cab hailing service that pays workers living wages and basic benefits? The word benefits makes it sound like it's a luxury, but stuff like healthcare and retirement planning is anything but, especially for low income workers. Somehow when it comes to innovation, the last place we want to do it is to helping people in a non-flashy way.

Besides, even without innovation, cabs/ubers can just cost more, or cab company owners (I don't mean the drivers) can just make less profit.

edit: I also think that welfare and healthcare should come from the government and not from companies, but I just don't understand how being profitable enough to pay people decent wages is a political problem at all. Nothing political about this - it just requires making a simple decision to divert some of your profit into something other than shareholder pockets.

[toomuchtodo]

Also New York, California, and the UK.

https://qz.com/808484/new-york-state-has-found-two-uber-driv...

https://www.nytimes.com/2015/06/18/business/uber-contests-ca...

http://business.financialpost.com/news/transportation/uber-d...

https://arstechnica.com/tech-policy/2016/10/uber-drivers-emp...

[Andys]

Australia has laws about this: eg. If you do >80% of your work for one company, you are an employee for all tax/employment law purposes.

[madeofpalk]

I don't think that effects GST though...

[pyrale]

> because we can't have "hobby" businesses causing discomfort to the well connected.

When this sentence is used by the well-connected elite of the best-funded region in the world, somewhere, the world's tiniest orchestra plays a sad tune on the world's tiniest instruments.

Seriously, guys ~~

[prolly_a_moron]

>Uber drivers are not employees. They are independent contractors.

This is under dispute, and I think you're going to find that governments around the world disagree with you.

[dorfsmay]

What are you talking about?

Uber is like a builder who hires contractors. The builder's revenue is >30 k CAD therefore they need to collect and remit GST.

If some of the contractors were to make less than 30 k per year, then they don't need to charge GST, regardless of who the builder is or the size of the projects they work on.

The "end user", the person paying for the house, deals with the builder, hence pays GST.

[run4yourlives2]

Irrelevant.

If you say you'll build me a website for $100, and I in turn contract that out to some guy in India, I'm still required to charge you $100 + $5 GST. The fact that I didn't use an employee to provide the service is of no issue.

It's right to close the loophole that really should never have existed in the first place, if not for industry lobbyists.

[milesrout]

Uber drivers are absolutely employees. They might claim that they are independent contractors, but they are not independent contractors. The law doesn't just say 'you can decide that your employees are contractors if you want to'.

[Mikeb85]

Do the drivers set their own price? No? Then they're not contractors.