A ride-hailing giant whose investors include Hollywood super-agent Ari Emanuel, the mayor’s brother, came out swinging Tuesday against the mayor’s proposal to slap a $1-a-ride fee on ride-hailing services.
Uber Technologies urged Mayor Rahm Emanuel to reconsider “this harmful plan” before the mayor has even had a chance to introduce the $1-a-ride fee.
“It’s clear the city’s proposed rider tax would slow economic growth in Chicago and take money out of drivers’ pockets at a time when jobs and growth are needed the most,” said the emailed statement released by Uber Technologies spokesperson Brooke Anderson, a one-time spokesperson for former Illinois Gov. Pat Quinn.
“This regressive proposal would not only eliminate jobs by instituting one of the highest rider taxes in the nation, but also make rides unaffordable for people who rely on them. We hope the city reconsiders this harmful plan.”
Uber has argued that it is “on track to pay more than $7 million in taxes and fees” to the city in 2015 alone, a figure that could grow to $11 million in 2016.
The company claims to employ 200 full-time employees in its Chicago office and more than 20,000 drivers who earned more than $200 million on the Uber app over the last two years.
Uber is also in the process of recruiting 10,000 additional drivers in South and West Side neighborhoods chronically underserved by taxicabs. The $1-a-ride-surcharge would make it difficult for Uber to meet that goal because it would depress demand by making it “more expensive to ride” in Chicago, the company said.
The $1-a-ride surcharge actually originated with Ald. Edward Burke (14th), powerful chairman of the City Council’s Finance Committee. Instead of slapping a $1 surcharge on taxicab rides and using the money to shore up the city budget, Burke proposed adding ride-hailing companies to mix.
During budget briefings, aldermen appeared to be united in their desire to stop giving Uber a pass and start giving Chicago taxpayers a cut of the action.
It doesn’t matter to them that the mayor’s brother is an Uber investor. In fact, aldermen believe additional regulation of the ride-hailing industry would help level the playing field for cabdrivers struggling to make ends meet.
As the Sun-Times first reported last week, Emanuel plans to include the $1-a-ride fee on ride-hailing services in a massive revenue package that’s also expected to include a $500 million property tax increase for police and fire pensions and school construction, a first-ever garbage collection fee and a tax on smokeless tobacco products.
City Hall sources said the surcharge would be part of a broader package or reforms aimed saving Chicago’s taxicab industry.
Three months ago, South Side Ald. Pat Dowell (3rd) demanded City Council hearings to determine how to level the “uneven playing field” between taxicabs and ride-hailing companies that has caused medallions prices and driver incomes to plummet.
Her resolution was co-signed by half the City Council.
It called for the License Committee to examine the “business practices” of ride-hailing companies, such as Uber and Lyft, and to determine the impact of a year-old ride-hailing ordinance that, cabbies contend, perpetuates a double-standard that has allowed those companies to siphon away their cab business.
Dowell said then she didn’t know what the ultimate outcome would be. She simply knows the City Council needs to do something to solve a problem that threatens the very existence of the taxicab industry.
“It’s an unfair competition. This unfair system has had an impact on the value of taxicab medallions in Chicago. Perhaps we can level the playing field,” Dowell said.
“These [ride-hailing] companies do their own background checks. They don’t have the same training or oversight that cabdrivers have to submit to before they can drive. We don’t get to know about whether they have the proper insurance or have passed the background checks. We need to look at maybe modifying the ride share ordinance to maybe address some of the problems we know are existing. The background checks. The license. The surge pricing. All the things they’re allowed to do that taxicab drivers can’t do.”
The ride-hailing ordinance approved by the City Council last year does not regulate ride-hailing fares or “surge-pricing” and does not restrict the number of companies, vehicles or drivers that could operate on Chicago streets.
It also created a two-tier system that allows part-time drivers to escape rigid screening. And it opens the door to the lucrative airport market that Uber once tried to enter illegally, only to be stopped by the city.
Ride-hailing companies would be prohibited from picking up street hails or riders at McCormick Place, O’Hare and Midway airports “unless the commissioner determines, in duly promulgated rules, following consultation with the commissioner of aviation, that such pick ups can be accomplished in a manner that preserves security, public safety and the orderly flow of traffic; and . . . designated taxicab stands or loading zones.”
During the mayoral campaign, then-Ald. Bob Fioretti (2nd) accused Emanuel of political favoritism, pointing to the conflict posed by Ari Emanuel’s investment in Uber.
Emanuel flatly denied the political favoritism charge after pushing through the ride-sharing ordinance that, the taxicab industry maintains, did not go nearly far enough.
Earlier this year, Emanuel stepped in for the second time in a year to block Uber from moving in on cabdrivers’ turf at O’Hare and Midway Airports.
It happened after Uber started an online petition to persuade City Hall to let Uber drivers make airport pick-ups.
Uber is still pushing for airport access, arguing that allowing the ride-hailing giant to service Chicago airports would help the city “secure an additional $15 million in new revenue.”