New ride-hailing tax is a gut punch few saw coming

It will put the service out of reach for some riders and make it less competitive for others.

SHARE New ride-hailing tax is a gut punch few saw coming
With the new year, taxes on ride share services will rise significantly in Chicago.

With the new year, taxes on ride share services will rise significantly in Chicago.

AP Photos

2020 brings a new year. A new decade.

And one more thing that’s so old.

New local taxes and fees are coming in January, courtesy of our state and local elected officials. They are always looking out for us — and our wallets.

The new year brings a hike in taxes on food and drinks at Chicago restaurants. More fees for parking meters and garages. Statewide, more for car registration fees and additional taxes on automobile trade-ins.

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And the tax I dread most. When Chicago’s new “congestion tax” kicks off Jan. 6, we will pay the highest ride-hailing tax of any city in the nation.

Mayor Lori Lightfoot proposed it months ago. Armies of spinners, analysts and prognosticators have debated its pros and cons.

City Hall says the tax will ease downtown congestion, raise $40 million in new revenues and encourage people to opt for more shared rides or public transportation.

Ride-hailing firms like Uber and Lyft argue the tax is counterproductive and will hurt low-income riders and people of color who depend on the services.

The Chicago City Council approved the tax Nov. 26, over vocal objections from some community leaders, ministers and other advocates.

I am a ride-hailing disciple. The disruptive innovation has freed us from a taxi system that gouged, disrespected and discriminated against consumers for generations. 

Now comes this onerous new tax. “Under former Mayor Rahm Emanuel, the transportation tax was a flat fee of 72 cents per Uber or Lyft trip. Now, single rider trips citywide will have a $1.25 fee, and those in the designated downtown zone will have a $3 fee,” according to Curbed Chicago, a website that tracks development, real estate and transportation issues.

“A shared trip in the downtown zone would have a $1.25 fee. Shared trips in neighborhoods, outside the downtown zone, will have a fee of 65 cents.”

“The downtown zone fees would apply between 6 a.m. and 10 p.m. in an area that covers the Loop, River North and a portion of the West Loop. The boundary streets include: Lake Shore Drive, Roosevelt Road, Desplaines Street, Van Buren Street, Ashland Avenue, Grand Street, North Branch Canal, North Avenue.”

Got that?

While the tax reduces the cost for most shared trips, it triples the tax for solo pickups and drop-offs in a sprawling area defined as “downtown.” There, you will pay an extra $3 per ride — as far south as Roosevelt Road and up to North Avenue.

The new ride-hailing tax is a gut punch few saw coming.

I have been surveying riders and drivers for weeks. Did you hear about the new tax? I ask.

Nearly all say, “no.” 

I explain. They shrug and add something along the lines of, “So what else is new? Taxing is what politicians do.”

Especially when we let them.

My 2020 prediction: The ride-hailing tax will leave us confused, disgruntled and disadvantaged.

It will put the service out of reach for some riders and make it less competitive for others. The ride-hailing companies will suffer a drop in ridership and revenues, and raise rates. Guess who pays?

City Hall projects the congestion tax will bring in $40 million in new revenues next year. Don’t count on it.

Instead of embracing ride-hailing as a problem-solving opportunity, short-sighted governments around the nation are grabbing the golden goose to milk it for new revenues. 

Then kill it.

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