CHICAGO -- Mayor Lori Lightfoot is moving to hit ride-hailing companies with a $40 million-a-year tax hike, and those traveling to or from downtown will bear the bulk of the load.
Under the mayor's proposal, the cost of hailing an Uber or Lyft will rise as much as $2.28 a trip above what's now paid in city taxes. Everyone taking a direct nonstop trip who is not picking up other passengers will pay at least 53 cents more each way.
Chicago City Council must still approve such a measure.
Lightfoot has been signaling for weeks she would boost fees beyond the 72 cents a ride the city now charges. Pointing to increased congestion, especially downtown, the mayor in a statement describes the fee hikes as "the first steps" toward a broader, London-style congestion tax.
Though much more research is needed to do that, she says the action is necessary "to improve mobility and further our goals of ensuring sustainable, affordable and reliable access to transportation options in every neighborhood."
Some of the $40 million in new revenue would go to help the Chicago Transit Authority develop seven bus priority zones on the South and West sides. The CTA believes it has lost a significant amount of business to Uber and Lyft. Another chunk of the proceeds will go toward other unspecified anti-congestion efforts.
However, most of the proceeds will go to the city’s general treasury, helping Lightfoot close an $838 million gap in the new budget she’s scheduled to unveil next week.
The proposal is expected to draw strong opposition from ride-hailing companies.
"This is not something they are pleased with," Rosa Escareño, commissioner of the city's Department of Business Affairs and Consumer Protection, said after giving the firms a briefing on the plan. "No business likes to see fees imposed on them. But (congestion) data is very telling."
"The mayor's proposal amounts to by far the highest ride-sharing fee in the country and will take money out of the pockets of riders, who rely on apps to get around, and of drivers — half of whom live in the South and West sides of the city," Uber spokeswoman Kelley Quinn said in an email. "As a candidate, the mayor said she was committed to equity, yet she is proposing to hike taxes by nearly 80 percent on underserved communities who do not contribute to congestion and lack reliable access to transportation."
Here's how the new tax structure would work:
Only one type of rider would see their tax drop: Those who share rides with others in a vehicle that makes multiple stops. That tax on such "shared trips" would drop seven cents, to 53 cents a trip, provided that the journey does not involve stopping or being picked up downtown.
Downtown is roughly defined as the area between the lake and as far west as Ashland Avenue, and from Roosevelt Road up to North Avenue. Navy Pier is excepted. The higher downtown fees would apply between 6 a.m. and 10 p.m. on weekdays, when congestion is worst.
Trips to O'Hare or Midway airports, McCormick Place and all other trips would remain the same, with a $5-a-ride tax surcharge.
All other rides would garner a higher tax. Single non-stop rides outside of downtown and shared rides to or from downtown would come with a $1.25 tax, up from 72 cents now. Those who travel from, say, Lincoln Park or another neighborhood downtown would face the biggest bite. Their tax would more than quadruple, going from 72 cents a ride now to $3, an increase of $2.28.
Though ride-hailing firms have said they're providing new services to minority neighborhoods that are poorly served by the CTA or conventional taxis, the city says its research shows almost all trips involve traveling to or from downtown and many are taken by relatively well-off commuters.
"These initiatives represent an important step towards ensuring that Chicago's transportation network remains equitable, accessible and safe into the future," said Escareño. "With this additional information, we will have the tools to continue developing forward-thinking policies that support Chicago's workers while preserving choice within the public vehicle industry."