Jason Newport/flickr

Jason Newport/flickr

The legal environment surrounding tech companies has always been tricky, and recent regulations placed on app-based services in Nevada highlight the troubles states are having with integrating these companies into existing legal frameworks.

Uber and its top competitor, Lyft, are two easy-to-use taxi-hailing services. Both apps have recently grown in popularity, thanks to their ability to provide safe, reliable, cost-effective transport for their users with an especially simple payment system.

Uber and Lyft [tweetable alt=”[email protected] briefly operated in #Nevada in late 2014 before halting when objections surfaced.” hashtag=””]briefly operated in Nevada in late 2014 before halting when objections surfaced that the safety, insurance, and licensing rules applied to these services weren’t as strict as those that bound regular taxi companies.[/tweetable] However, Nevada state lawmakers recently compromised on amendments to a bill that will allow Uber and Lyft back into the state.

Originally, the bill proposed a surcharge of 25 cents-per-ride, but was rejected in a Senate vote. [tweetable alt=”A new #Nevada bill proposes a 3% tax on @Uber and @Lyft fares, with the profits being put towards road construction.” hashtag=””]The revised, approved bill proposes a 3% tax on Uber and Lyft fares, with the profits being put towards road construction projects.[/tweetable]

The Controversy

The nature of compromise, as Democratic state senator Aaron Ford told Autoblog, is that “No one’s going to be fully satisfied.” State lawmakers claim the proposed new tax will raise up to $100 million every few years towards the state’s budget deficit, with the first $5 million going towards the state Highway Fund and the remainder into the general fund.

The revenue generated through the bill will contribute greatly to funding for several major projects, including a medical school at the University of Nevada, Las Vegas, causing many to hail the bill as a victory for Nevadans.

However, representatives of the taxi industry were unhappy with the result — their major qualm is still with the lack of regulation restricting Uber and Lyft drivers. The process by which drivers are selected is streamlined in comparison to regular taxi drivers, and is comprised of a much less rigorous system before they are cleared to drive.

Kimberly Maxton-Rushton claims the bill passing is “a thinly veiled attempt to trade critical public safety for the promise of millions of dollars in return.”

Who Took What Side?

Both Democrats and Republicans at first took the side of the taxi industry, opposing the initial bill unilaterally. Republican majority leader Michael Roberson acknowledged the benefits of the bill passing, stating that the revenue generated from the bill will be extremely helpful in completing construction projects, mentioning the University of Nevada, Las Vegas Medical School in particular.

The bill also contains tighter regulations on insurance and licensing rules, making the compromise a success for both parties.

Window of Opportunity

The legal environment for app-based services such as Uber or Lyft is still tricky. The recent legislation will likely raise more questions about other app-based companies that provide on-demand services, meaning that the rules that new apps are expected to play by may continue to get stricter as time goes on.

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