It’s not a new phenomenon, in times of economic mistrust and scarcity, people turn to other ways to trade and get things done directly between one person who needs something and someone else who can provide it – such as barter, formal Local Exchange Trading Schemes (LETS). As the recession continues to bite deep in Europe whilst some governments appear to go out of their way to make it as difficult and expensive as possible to launch a fully-legal new business, it’s unsurprising that people are finding new and creative ways to deal directly with each other.
What is being termed the ‘collaborative economy’ has far greater reach now thanks to online and social communications, and rather than being effectively limited to small localised interactions there is now potential for global reach. Want to book an apartment in Andorra or a mansion in Malaysia? Rent direct from the owner via Airbnb. Want to send Hongkong Dollars to Hawaii? Use Transferwise peer-to-peer dealing to save on bank and brokerage fees… Even the far-from-new eBay fits this model, enabling buying and selling between individuals on a global basis in a way that simply didn’t exist before the introduced it.
The advantages for the consumer are mainly about cost, because by disrupting traditional models they result in cost savings for all users – as well as generating amazing profits for the businesses behind them, as a rule. Naturally they are disliked by government tax authorities as well – peer to peer transactions have often taken place outside of traditional structures designed to collect tax revenues, and now it’s going on at an unprecedented scale – even before you look at the complicated financial issues of where a virtual company resides and pays their corporation taxes.
But the big losers tend to be the established businesses using traditional models, who simply cannot compete with the new platforms – particularly if their business model is focussed on a single activity that is immediately rendered uncompetitive.
And what Transferwise has done for the foreign exchange industry, Uber has done for the private hire trade – creating a direct line of communication between people who need a lift somewhere, and someone who can drive them there. Now available in over 100 cities worldwide, the app is creating serious disruption in a another long-established industry.
Of course, people have always been able to ring for a minicab, but part of the reason Uber is creating such a fuss is the way the app works to calculate the fee – which takes into account the journey time as well as distance.
This fundamentally sets it apart from the minicab trade, and impinges on what has, in both Spain and the UK, always been regarded as the sole domain of the licenced taxi cab industry.
Spain has tried to ban the app completely, threatening users with fines – but has now stepped back from this position following EC advice (though they have left the door open from the personal taxation point of view, to target drivers profiting from providing lifts via Uber). Spain’s legal position regarding Uber’s recent launch in Barcelona, is as follows:
“Private transportation is qualified as such if it is used for personal or domestic transportation needs of the owner or close relatives. […] Under no circumstances, will the private driver receive any kind of direct or indirect remuneration except for food money or transportation costs.”
This has also threatened the foundations of non-profit-making lift share services such as Blablacar.com, although these may ultimately be fine as it’s clear that where governments are concerned, it’s the fear of untaxed income rather than lost livelihoods which is the prime motivator.
In the UK and London in particular cab drivers organised a protest in Trafalgar Square on 11th June, causing chaos and congestion with a go-slow – arguing that by clocking up time and distance costs the Uber app effectively acts as a taximeter… and by law, only licenced black London cab drivers are allowed to use these. Transport for London disagree, because app does not require a physical connection between the device and the car.
Spain’s legal challenges to Uber remain unresolved, but the anger burns on across Europe, from those whose livelihoods were established in the taxi trade – A day of protest in Paris earlier this year saw tired slashed and windows broken in a protest at the airport.
In Spain, a press release from the Spanish Taxi Confederation threatens further unrest:
“[Uber] is, to the best of our knowledge, a totally illegal business that incites the use of “pirate” transportation without any guaranty for the consumers as well as fomenting the black economy as none of those transactions are registered as economic activity or under administrative control […] If no immediate correction measures are taken, we might be on the verge of an imminent nationwide protest.”
What do you think about peer-to-peer lift-hiring? Does the tax position bother you, or do you prefer to save money by dealing direct? Are you concerned about safety when using sites like this, or does the peer review system – rather like eBay ratings or Airbnb reviews – offer you reassurance, being from real people, rather than putting your trust in a minicab firm to have vetted their drivers?
Let me know what you think info@costaconnected or @casslar
Costa Connected, for Costa Blanca News, June 20th 2104 ©Maya Middlemiss, Casslar Consulting SL