An Online Delivery Surcharge Will Not Save The MTA
A regressive tax on an essential service is no way to fund the MTA
While the switch from in-person to online retail has been taking place for years, due to the COVID pandemic 2020 may become known as the Year Everyone Pivoted To Online Retail. During the lockdowns and closures of nonessential businesses in spring and early summer online retail became a lifeline for those living in areas that suddenly become retail deserts. In the second quarter of 2020 online retail rose 31.8% over the first quarter and a whopping 44.5% over the second quarter of 2019, the third quarter of 2020 boasted a 37.1% increase over the third quarter of 2019. The biggest single winner has been Amazon - in the second quarter it drew a record-setting $5.2B in profit, only to set a new company record in the third quarter with $6.3B in profit.
As much of a blessing online retail has been to consumers this year, not everyone is pleased with the results. In an op-ed for NY Daily News, John Samuelsen and Robert Carroll propose a $3 surcharge on packages ordered from online retailers and delivered in New York City. Why would, in the middle of a pandemic where we are encouraging people to stay away from indoor gatherings, would anyone even propose such a thing?
Take a deep breath for this one
“An estimated 1.8 million packages on average are delivered daily to apartments and homes in the city. Delivery trucks and vans are a ubiquitous presence on our city streets, weaving through our neighborhoods, double-parking in bus lanes and idling outside buildings, day and night.
Shopping online is cheap and convenient. It also means more trucks clogging city traffic, slowing buses, and spewing pollution, all of which have costs of their own.
…
A delivery surcharge would incentive some consumers to patronize neighborhood businesses instead of reflexively ordering items online from Amazon, Walmart, Etsy or eBay. They might be reminded how local mom-and-pop stores, and bigger retailers like Bloomingdales and Macy’s, are part of what makes a city dynamic, diverse and interesting. These businesses also employ our neighbors.”
To the first point, I’d be tempted to ask if either one of these gentlemen has ever been to NYC. Delivery trucks and vans are a ubiquitous street clogging presence in the city under normal circumstances. The one difference between pre-pandemic and post-pandemic NYC is that there is now less traffic for delivery trucks to maneuver around.
To the second point let me reiterate - WE ARE IN THE MIDDLE OF A PANDEMIC WHERE PEOPLE ARE BEING ASKED TO AVOID INDOOR GATHERINGS! What kind of lunacy is it to discourage people from the safe practice of online shopping in favor of the riskier practice of in-person shopping? It’s laudable to care about your local businesses and try to patronize them when possible but penalizing NYC residents for not doing so is horrible policy.
Even more absurd is what the earnings from the $3 surcharge are to be used for - funneling money to the MTA. The MTA is facing a massive budget shortage due to the pandemic - ridership dropped 90% during the lockdown - but their dire financial situation predates it. Samuelsen and Carroll predict that the package surcharge will raise more than $1B a year, however, the MTA has said that if they do not secure at least $12B in federal aid by the end of the year they will have to start drastically cutting services.
I have some sympathy for the position the MTA is in; NYC bore the brunt of the first wave of covid and the city is still trying to recover while preparing for a possible second wave this winter. According to the agency’s current plan 8,238 MTA workers face layoffs, and that would be on top of raising fare prices.
There is an elephant in the room that none of the currently proposed remedies is addressing however - how long will MTA need financial assistance to stay afloat without massive structural changes? One of the biggest areas of discussion on what a post-pandemic NYC will look like is if and when workers will return to their offices? As of now the numbers aren’t looking so good, predictions are that only 15% of Manhattan office works will return to in-person working by the end of 2020. Even more grim are the 2021 projections - only 48% of workers are expected to be back in offices by July 2021. In an MTA commissioned economic forecast, consulting company McKinsey & Company predict that MTA ridership will not return to pre-pandemic levels until 2024 in a best case scenario. The biggest unknown factor now is how will vaccine availability affect the decisions by both businesses and workers to return to office life, but there is a very real possibility that even once it’s safe to do so those workers will not be returning. If that happens, the MTA is going to have to address permanent budget reductions due to loss of ridership.
All of this is secondary to the largest issue with the package surcharge proposal - it would amount to the most regressive of regressive taxes. Asking the elderly on fixed incomes and low-income workers who have no choice but to go to work to further risk their health by shopping in person to avoid a package surcharge is reckless and cruel. The proposed package surcharge is cruel in another way - it shifts the burden of funding the MTA onto those who are practicing safe behavior by avoiding in-person shopping. In a time where it is difficult to keep everyone on board with maintaining safe behaviors, anything that actively penalizes it should be dismissed immediately.
I understand how vital the MTA is to New York City and the millions of residents for whom it is their only form of transportation. The agency is in big financial trouble and, if the predictions hold, will be for years without a serious overhaul of personnel and services. Placing a package delivery surcharge, and encouraging people to be the Box Police, will do nothing to address the larger issues at the MTA and will harm those who rely on online retail to meet their needs during this pandemic.