Limit on the number of drivers on Uber, DiDi and taxis worries experts

QCOSTARICA – The possibility of the government influencing the supply and demand for taxis and mobility platforms such as Uber and DiDi is something that worries experts, in particular article 9 of the bill presented to the Legislative Assembly on Wednesday.

The bill establishes that the Ministerio de Obras Públicas y Transportes (MOPT), together with the Ministerio de Economía (MEIC) – Ministry of Economy –  will carry out market studies every four years on the demand.

The idea is to prevent ruinous rates from being charged for any of the competing groups, while the State would be empowered to make decisions and defend the sectors.

The article in question states that “the Executive Power, in accordance with the regulations, may establish measures to eliminate oversupply in terms of the number of drivers authorized in general to provide the transportation of people.”

“In relation to article 9, I totally disagree with the bill’s claim to include the MEIC and the MOPT to carry out market studies and thus determine if it is dealing with ruinous rates or ruinous competition. This is somewhat crazy, it is like going back to the time of price controls and involving the Ministry of Economy in control issues as the USSR did and its centralized planning of the economy. Supply and demand should be used to determine which companies survive in an economic activity”, Otto Guevara, former legislator and perennial presidential candidate, told La Republica.

For the politician, the ideal is for prices to drop as a result of the competition, so that consumers look for the options that are closest to their budget.

“If someone goes bankrupt in that process, then others will emerge to fill that void. What is contained in article 9 of the project is unacceptable”, added Guevara.

To operate legally, platform drivers will have to insure themselves before the Caja Costarricense del Seguro Social (CCSS) as independent workers, in addition to paying income tax on their earnings to the Ministry of Finance.

Also, drivers will be obliged to purchase insurance against damages and will have to identify their vehicles with signage.

Both taxi drivers and platform drivers will have to go submit their vehicles yearly to the vehicular inspection (RTV). Taxis, as other public transport vehicles, currently have to submit to the RTV twice a year.

Regarding the rates, the proposal establishes a base amount per kilometer.

“This is a very interesting initiative because it begins to set a course for the coexistence between (official) taxi drivers and digital platforms. On the one hand, the apps will be legal and at the same time, taxis will be able to compete. I am concerned about the control of the number of drivers, but I think that in general terms it is good,” Daniel Suchar, an economic analyst, told La Republica.

Mobility platforms, starting with Uber, have been in the country for seven years and to date there is no law that regulates them.

Past governments proposed regulations, but none were fruitful.

“The new bill is a starting point that opens an opportunity to establish clear rules for the platforms and, at the same time, make the conditions for taxis more flexible, guaranteeing legal certainty for everyone. Like any initial proposal, it contains articles, such as this one, that will require further analysis during the discussion in the Legislative Assembly, where we will ensure that the various business models are not affected, the opportunity for more people to provide services is not limited, – especially when unemployment is a constant concern and there is a great need to generate profits to get ahead on a day-to-day basis-, and free and effective competition is not limited, nor the free market rules on which these activities are based, as indicated by the same law,” said Silvia Alvarado, Uber’s public policy manager in Central America, the Caribbean and the Andean region.

If the proposed bill by the government of Rodrigo Chaves is approved, Uber and DiDi drivers would have to meet these requirements to operate:

1. Payment for operating permit to the MOPT that has a cost of ¢50,000 for the first year. The same cost would have to be paid by taxi drivers with connection to platforms.
2. Insure themselves before the Caja Costarricense del Seguro Social (CCSS) as independent workers
3. Have no unpaid traffic fines.
4. Not have committed reckless driving offences, such as driving under the influence of alcohol or drugs, in the past five years.
5. Submit a criminal report.
6. Pay income tax on their earnings by registering with the Ministry of Finance as a taxpayer.
7. Carry liability insurance to cover third parties. This is in addition to the compulsory insurance provided in the Marchamo.
8. Vehicles cannot be more than 15 years old.
9. The maximum passenger capacity is eight persons.
10. Vehicles must be identified with signage.
11. Vehicles must pass the yearly vehicular inspection or RTV.
12. Vehicles must be up to date with the payment of the Marchamo, which includes the obligatory automobile insurance.

As to the operators of the mobility platforms, their requirements include:

• Register as legal persons (corporation) in the National Registry and as an employer before the CCSS if they have corporate staff in the country, as well as pay income tax, have ownership or concession rights of a platform and collectors of the Value Added Tax (VAT) to users through the platform.
• Must pay an annual operating permit to the MOPT and have a mechanism to promote the safety of users, and avoid sexual harassment and discrimination, among other requirements.
• The MOPT operating permit must be renewed every five years.
• To obtain the operating permit, operators would have to comply with the legislation and good practices in the field of computer security that must be reviewed by the Ministry of Science, Technology and Telecommunications (MICITT).