Emanuel to pile on to tax ‘fatigue’ with phone, ride-hailing increases

SHARE Emanuel to pile on to tax ‘fatigue’ with phone, ride-hailing increases

A planned hike in the city telephone tax would free up money elsewhere in the city budget to shore up a pension fund. | Associated Press file photo

County Board President Toni Preckwinkle has blamed tax “fatigue” for the fizzling of the sweetened beverage tax.

If that’s true, the politician most responsible for creating taxpayer exhaustion is about to make it worse.

Besides restructuring Chicago’s amusement tax, Mayor Rahm Emanuel’s 2018 budget will raise both ride-hailing fees and the monthly tax tacked on to Chicago telephone bills — both cell phones and landlines — by 28.2 percent. That will free up money to shore up the Laborers Pension Fund until 2023.

The ride-hailing fees were still being finalized Monday. They could raise both the 52 cents tacked onto every ride and the $5 slapped onto every pick-up and drop-off at O’Hare and Midway Airports, McCormick Place and Navy Pier, in part, to help a shrinking taxicab industry fighting for survival in the Uber era.

The phone tax hike was authorized and re-authorized by the General Assembly after yet another public squabble between Emanuel and Gov. Bruce Rauner.

Instead of $3.90 per number, per month, Chicagoans will pay $5 per number. That will cost a family of four with four cell phones and a landline an additional $66 a year.

That’s on top of the $84 in annual costs that same family has paid since 2014, when Emanuel raised the telephone tax by 56 percent to save the Laborers Pension Fund.

Ald. Pat O’Connor (40th), Emanuel’s City Council floor leader, was asked whether he is concerned about piling on to the avalanche of tax increases already imposed on Chicago residents and businesses.

They’ve been hit with nearly $1.1 billion in property tax increases, primarily for police, fire and teacher pensions and school construction; a 29.5 percent tax on water and sewer bills to save the Municipal Employees pension fund; the earlier telephone tax hike for the Laborers fund; a new garbage collection fee; a bag tax; and increases in water, sewer and city sticker fees, hotel and parking taxes and parking fines, among others.

“I’m not sure how it will be received, but I do know there’s some significant expenditures we have as it relates to the infrastructure around the phone system,” O’Connor said.

But will the taxpayer revolt that led to the repeal of the county’s soda tax make aldermen reluctant to impose additional taxes, particularly regressive ones like the phone tax?

“Nobody is going to welcome any additional costs. But a distinction that could be made here is that, when we are increasing any fee, we’re pretty clear on what’s being raised and what it’s being raised for vs. telling people we’re raising it for this purpose and it’s for another,” O’Connor said.

“In the pop tax, you had the indication it was primarily a health issue. Then, you exempt [poor] folks using the WIC program. So the argument about health is pretty much out the window.”

Ald. Gilbert Villegas (36th), chairman of the City Council’s Hispanic Caucus, argued that $150 a year of telephone tax hikes in three years is too much to ask of a family of four, particularly “with everything that’s going on with the county related to the soda tax.”

“Having a cell phone is a necessity. My two boys have cell phones. We need to stay in contact after school and throughout the day. To pay more for that type of service — I just have to see what other options there are besides that,” Villegas said Monday.

“We do need to fund the pensions. But I’d like to see … if there’s any alternative.”

Rauner viewed the telephone tax hike as “unacceptable,” in part because Chicago has “already received two significant” telephone tax hikes in the last four years.

His administration has also warned the city that telephone tax revenue cannot legally be used to pay for pension obligations.

That’s apparently why Emanuel has tried to sell the increase as essential to maintaining Chicago’s 911 emergency system. Never mind that the $27 million in annual revenue generated by the tax hike and used for 911 center improvements would free up that same amount in the city’s corporate fund for future pension payments.

“911 was always supposed to be independently funded and separate and not a drain as it relates to the city and property taxpayers,” the mayor told reporters when the Legislature authorized the increase.

Two years ago, Emanuel convinced the Legislature to expand the homeowners exemption to provide some measure of relief for beleaguered Chicago homeowners.

In August, Rauner signed yet another bill that expanded the homeowners’ exemption for Chicago residents by more than 40%—from $7,000 to $10,000.

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