Brazilian city proposes levying fees on controversy-plagued rideshare service Uber

Sao Paulo's city hall on Tuesday proposed levying fees on Uber, a plan praised by the ride-hailing service but protested by taxi drivers in Brazil's largest city who say the plan does not go far enough to regulate the rapidly growing app.

The proposal, which is open to public consultation over the next 30 days, suggests that apps connecting users and motorists be obliged to register with city hall and buy credits from the government to cover kilometers traveled. The price per kilometer paid to the city would vary, depending on time of day, distance and location.

Uber Technologies Inc endorsed the proposal as "innovative" in a statement and said it would take part in the consultation. The proposal was less well received by taxi drivers in Sao Paulo, as hundreds of cabbies blocked roads in protest.

The ride-hailing app has come under fire in countries around the world, with taxi drivers complaining Uber drivers are not properly regulated and have fewer overhead costs, which makes them unfairly competitive.

In July, Mexico City became the first city in Latin America to successfully regulate Uber, with a 1.5 percent ride levy and a yearly permit fee.

According to the proposal, ride-hailing apps like Uber will also be given six months to develop the capability to allow drivers to pick up multiple users with similar destinations, a proposal meant to alleviate fears of adding more cars to already-congested roads.

Sao Paolo's first attempt to regulate Uber failed in October. Then, city hall created a new category of taxi known as "black cabs" after the executive cars offered by Uber. However, the company said it was not a taxi service, ignored the legislation and continued to operate as normal.

The mayor of Rio de Janeiro, Brazil's second largest city, tried to ban Uber in September, but the service continues to operate normally there.

(Reporting by Luciana Bruno; Writing by Stephen Eisenhammer; Editing by Bernadette Baum and David Gregorio)