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However, generally in comparison with the average black cab they are able to out price the journeys as the respective journey costs around £22 (using from data from The Telegraph); this is around 28% more and therefore uproots the need for paying for a black cab over an Uber. As Uber becomes more competitive, it begins to hold a monopoly effect over the industry where the black cab service slowly becomes reduced due to the technological appeal and advancement it holds over cabs. Uber is far more practical and cheaper in some instances, and so business slows down for local taxicab services as more drivers switch companies. They are having to work certain hours with a local Taxi Rank, but flexible hours are promoted with Uber. As a monopoly becomes more apparent; Uber has the power to increase prices for the desire of higher revenue and due to their network and increasing popularity, consumers are unlikely to shy away from these prices. Moreover, they do not care or have time to check prices.
A regulation to prevent the ability for monopolisation is to subsidise local independent companies in order to drive down their costs of travel and also hire more drivers, to give Uber more competition. Lower prices mean consumers may switch between the two entities and provide regular business for the black cab industry. However, this is very unlikely to occur and other improvements to businesses could include negotiation of price at the end of the journey. Some favour this as riders are reminded that they are dealing with real life people instead of multi-million dollar corporations hidden behind their internet app.
TFL has a role to licence and regulate the taxi and private hire industry in London making sure each separate firm pays the correct percentage of tax with respect to their earnings. However, their powers and ability to regulate an Independent contractor’s corporate structure is limited and almost impossible as they cannot determine how or where they pay tax. TFL cannot regulate the total amount of tax Uber pays in comparison to the Black Cabs. As a result, controversies arise as Uber are able to siphon money out the local economy as it is all being deposited in an overseas account.
Uber pays little corporation tax within the UK and is often cited that four Black Cabbies pay as much tax as one Uber. This is as its employees are independent contractors who only pay their income tax. The corporation tax is avoided as the money is not transferred to Uber, directly. The drivers and riders both have their bank accounts linked to the app and the fare is transferred from the consumer’s account to the drivers. From there, the drivers pay a 20% (25% for new drivers), base commission of their salary to Uber. Therefore, Uber pays vastly lowed corporation tax as the revenue drawn from the UK is legally transferred to a sister company in the Netherlands in where the profits would be taxed at reduced rates.
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