Chicago telephone-tax hike should be eliminated in wake of pension ruling
In an effort to shore up pension debt, Chicago officials in 2014 adopted a pension-reform package that included raising the telephone tax. Though the Illinois Supreme Court struck down these changes, the tax hike remains.
The Illinois Supreme Court on March 24 struck down a state law designed to shore up two of Chicago’s city pension funds.
As a part of the now defunct pension-reform plan, the city passed an increase to the telephone tax, which raised the telephone surcharge to $3.90 from $2.50 per line, the emergency telephone system fee to $3.90 from $2.50 per line, and the prepaid wireless tax to 9 percent from 7 percent.
Now that the pension-reform plan is dead, the telephone tax hike should be eliminated, too.
Those changes equated to a 56 percent increase in the city’s telephone taxes, and caused Chicagoans’ bills to rise by $16.80 per line per year, or $67.20 for a typical family plan with four lines. The changes have brought in approximately $50 million annually since September 2014.
The telephone tax was viewed as the favorable alternative to hiking property taxes (which ultimately happened anyway, after Mayor Rahm Emanuel and city aldermen faced reelection in the 2015 municipal elections). It was sold as a modest increase to upgrade the city’s 911 center and to free up general funds to make increased payments to the city’s municipal workers’ and laborers’ pension funds, as required by the pension-reform plan.
Since these taxes are tacked on to a monthly bill, few people tend to notice the increases. For all intents and purposes, they are below-the-line taxes, included in the price of a good or service.
To add insult to injury, the city’s Budget Committee chair, Alderman Carrie Austin, 34th Ward, suggested that more phone taxes may be coming.
The 2014 telephone-tax increase was meant to be part and parcel of the pension reforms passed in Springfield. Now that those reforms have been declared unconstitutional, the telephone taxes should be rolled back. It’s bad enough when government loads past mistakes on the backs of taxpayers. Now those funds are simply available for the mayor and the City Council to spend as they see fit.
As long as Chicago politicians find ways to nickel and dime the citizens of Chicago, true reforms will never come. Chicago and Illinois have two clear paths before them: continue the status quo and the tax hikes that come with it, or demand real, meaningful reforms to the pension system. It’s clear which path is correct.