26 Mar 19

Free-floating tax to prevent free-riding

They are free-floating, and mostly tax-free as well, however the city of Paris has decided to tax the companies of free-floating scooters, bicycles and mopeds. 

The tax will be used by the city to create around 2,500 dedicated parking spots, in order to tackle the parking issues caused by several free-floating shared mobility services. The tax will be paid by the service providers, per vehicle per year. The municipality underlines that the users should not see any difference in price, however, this is not guaranteed. 

Further on, since the fee will be used to create parking zones for free-floating vehicles, it must only be paid for dockless ones and the scooters and bicycles that are docked at a fixed station don’t have to pay at all. Yet, Paris estimates to have about 15,000 free-floating shared mobility vehicles driving around and expect it to increase to 40,000 in the near future. Scooter and bike sharing companies are surprisingly not reluctant to pay the fee but see it as an investment and the confirmation of their position in the city. 

A similar tax is already in place in other French cities such as Marseille and Hauts-de-Seine. Paris will start taxing at the soonest in July. The announced tax is currently under review by the Senate and will have to go to the National Assembly as well, who will decide on it by July 2019.

Free-floating or free-riding

In 2017 the Committee on Transport and Tourism of the European Parliament has published a study on 'Infrastructure funding challenges in the sharing economy'. While making some recommendations to incentivise shared mobility, the study warns as well of the need to tax shared mobility platforms to invest in infrastructure. This kind of tax would prevent free-riding of existing infrastructure – as the city of Paris is trying to solve with its tax – as well as prevent value appropriation by this kind of platforms. 

Yet many cities in Europe and in the US are struggling to find the right taxation scheme to address these challenges. The few cities in France that tax free-floating shared vehicles might set a precedent for other cities to follow. The rising amount of dockless shared vehicles does increase the pressure on pavements, parking spots and the cities’ mobility system in general, hence the demand for a similar tax alike will grow as well.

Authored by: Fien Van den steen