The government should encourage entrepreneurship and innovation, not stifle itRide-sharing is here to stay, and laws will make the operators more responsible.
After months of holding out against its own ban on ride-sharing services, it seems that the government has finally decided to act against them. The ‘urgent’ notice on the Department of Transport Management’s website, signed three days ago, calls to cease the use of private vehicles for anything other than what they are allowed under the Transport Management Act 1993, saying that violators would be penalised accordingly. This obviously targets ride-sharing, since the whole platform depends on the matching of vehicles—most of them private—to individuals who need transportation. While the ridesharing apps have had many legal issues—the safety of passengers, their insurance policies and their collecting money under false pretences coming to mind—the fact remains that they are popular among the people. Such innovative ventures should be encouraged. What the government should definitely not be doing is to use archaic laws to punish innovation and entrepreneurship.
The ride-sharing and ride-hailing apps have really taken the global transport market by storm. In Nepal, Tootle and Pathao are the two companies that have captured the market. Being cheaper than taxis, and fast and more comfortable than public transport, the two act as platforms that connect the riders willing to provide a service (sharing their pillion seat or car space for a journey) to passengers who want it. It is no wonder that the combined user base of these two apps exceeds 450,000. Moreover, the two together have more than 26,500 riders that provide over 8,000 trips a day in the Kathmandu Valley. Due to the legal ambiguity of the depth of their role in the transaction, they are currently registered as IT companies. This, the companies argue, provides them with some separation from the obligations that regular public transport providers have.
Therein lies the problem. The ambiguity of what the business entails—whether it is simply a matching platform or a ride-hailing one—allows it to work in a loophole, albeit with the constant threat of the government changing its mind from time to time. But it is obvious that the popularity of the service demands it provide more protection to its passengers and more security for its riders. The riders identify as gig workers working for the company, and the passengers usually use the service having some trust in the brand. And the ambiguity goes beyond classification. For one, Tootle was found to have been collecting VAT on every ride for 19 months without government approval. The company was also found to be deducting tax at source for every ride, like a company would for its employee salaries. Yet the government was unsure whether this tax deduction was being filed. On the other hand, Pathao was found to not collect income tax, and did not know whether its riders were paying tax on their income. With the popularity of the services, this seems like a missed opportunity on the government’s part to update regulation and tax the companies uniformly.
Furthermore, the legal black hole has apparently left the passengers without accidental insurance cover, as none of the insurance companies in Nepal are willing to work with Tootle and Pathao until the laws are updated and their business model is well-defined. The service providers should realise that once a passenger decides to use their service by paying for it, choosing not to take responsibility for any unwanted mishap is not an option for them. The government should explain why it has taken so long to implement new laws, ones it promised would apply from April 2019 onwards. These services are here to stay, and regulated service would make the service provider more responsible, besides guaranteeing safety to the customer to some extent.
What do you think?
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