Victoria legalises Uber, passes $1 levy

Victoria will impose a $1 levy on all commercial vehicle trips after legalising ride-sharing service Uber.

The levy will come into effect next year, replacing licence fees and helping compensate taxi operators.

Public Transport Minister Jacinta Allan says the reforms create a level playing field for taxis to compete with ride-sharing services and will encourage new operators to enter the market.

The bill was passed on Thursday after the government accepted upper house amendments including the halving of a proposed $2 levy.

Under the reforms, ride-share drivers will be required and be accredited, while the the government will buy back licences from taxi drivers wanting to exit the industry.

Drivers will receive for $100,000 for a first licence and $50,000 each for up to three additional licences.

The government also agreed to remove a $50 million cap for their fairness fund to ensure all eligible applications receive payments.

Liberal deputy leader David Hodgett said the government's levy would hurt vulnerable people who relied on taxis and ride-sharing services.

Uber in a statement said it was pleased to see the "important reforms" passed "for the benefit of the travelling public, drivers and the industry as a whole".