Lightfoot proposes $40M tax hike on solo Uber, Lyft rides in downtown Chicago

Lightfoot proposes $40M tax hike on solo Uber, Lyft rides in downtown Chicago

The mayor proposed tripling ride-sharing taxes and fees on solo passengers downtown, on top of other increases, as the city confronts a nearly $1 billion budget deficit and a costly contract dispute with the nation’s third-largest teachers’ union.

Getting around Chicago could soon become more expensive for solo passengers using ride-sharing services, such as Uber and Lyft.

Chicago Mayor Lori Lightfoot announced plans Oct. 18 to enact a series of “congestion fee” hikes, aimed at encouraging eco-efficient carpooling and generating $40 million in new annual revenue. The increases would target those who use ride-hailing services downtown during peak traffic hours, and those who prefer a personal ride, as opposed to selecting the “shared” option, citywide.

The steepest increase would hit users riding solo in a special “downtown zone” covering the central Loop and surrounding areas, who’d pay $3 in fees on every ride – more than triple the current 72-cent rate.

Outside downtown Chicago, individual rides would spike to $1.25 from 72 cents, as would pooled trips within the designated zone downtown.

Lightfoot’s proposal would slightly lower the rate of taxes and fees paid on shared rides outside of downtown Chicago, to 65 cents from 72 cents. The flat $5 fee tacked onto trips that run between the city’s airports and either downtown’s Navy Pier or McCormick Center would remain unchanged.

The city would enforce the new downtown-specific fee hikes from 6 a.m. to 10 p.m. on weekdays, according to the mayor’s office.

The $40 million in new revenue would factor into the city’s budget for fiscal year 2020, which currently faces an $838 million deficit. The city would allocate funds from the fees to the Chicago Transit Authority and the Chicago Department of Transportation, among other related investments, according to the mayor’s statement.

Lightfoot’s proposed fee structure follows from a congestion study the city conducted in 2015, which found a 271% spike in ride-sharing citywide, which was partially responsible for heightened traffic density, particularly in the Loop.

The city’s analysis did not find high levels of congestion in neighborhoods outside the Loop and its bordering neighborhoods. Individuals located in neighborhoods outside downtown – including low-income areas on the west and south sides – would still pay the newly increased $1.25 fee.

That could impose an unfair burden on poorer residents. In fact, the city’s own data has shown that ride-sharing cars provide needed transportation services to low-income, predominantly minority areas which had been long underserved by traditional taxicabs. Public transportation alternatives are often less reliable – or altogether nonexistent – in many of those areas.

Chicago previously raised fees on ride-sharing services in 2017, becoming the first city to do so.

The newly proposed fee increases also come as Lightfoot continues negotiations with the Chicago Teachers Union, whose current list of demands would cost taxpayers more than $1.1 billion over the next three years.

Lightfoot should not repeat the mistakes of her predecessor by attempting to tax the city out of its severe, structural fiscal problems.

Lightfoot on the campaign trail declined to support the idea of changing the Illinois Constitution to reform pensions, as former Mayor Rahm Emanuel did upon exiting office. The new mayor would be wise to acknowledge sooner than later that it isn’t too late to take the only responsible, if politically difficult, path out of its endless budgetary crises: constitutional pension reform.

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