Emanuel claims ride-hailing industry costing taxpayers $40M
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Mayor Rahm Emanuel appears to be laying the groundwork to raise taxes and fees on ride-hailing services like Uber and Lyft — by claiming that phenomenal growth in that industry has cost Chicago taxpayers more than $40 million in lost revenue from other sources.
Two years ago, Emanuel gave cabdrivers a 15 percent fare increase but handed ride-hailing companies the lucrative right to make pickups at O’Hare and Midway Airports, McCormick Place and Navy Pier. In return for eliminating the last bastion of exclusivity for Chicago taxicabs, Uber and Lyft were required to pay the city $5 for every pickup and drop-off at those four prime locations.
Instead of requiring chauffeur’s licenses for making airport pickups, as aldermen had demanded, Emanuel agreed to study the idea and charge the ride-hailing industry 2 cents more per ride in the meantime — for a total fee of 52 cents.
Now, City Hall is arguing that, in spite of both of those fees and the shift of riders from taxis to ride-hailing, Chicago taxpayers are losing money.
The $5 surcharge took effect in November 2015. During that year, “ground transportation tax” revenue from ride-hailing, taxis, liveries and other transportation providers amounted to $17.1 million. Forty-seven percent of that revenue came from Uber and Lyft.
Last year, those taxes raised $59.6 million, but 81 percent of it — $48.3 million — was generated by Uber and Lyft.
This year, the city expects to receive $85.2 million, with 88 percent of it coming from ride-hailing.
Molly Poppe, a spokesperson for the city’s Office of Budget and Management, noted that revenue increases “do not occur in a vacuum.” Riders’ changing behavior prompted “revenue growth in this area” while other revenues have declined, she said.
“In total, we believe that the city and its sister agencies have lost more than $40 million in revenue from other sources due to growth in the rideshare industry,” Poppe wrote.
“This shortfall includes tax, license and permit revenue losses from other public vehicles, decreased payment in parking garage tax, motor vehicle lessor tax and lease tax, reduced ridership on the CTA and reductions in the MPEA airport departure surcharge.”
Uber, whose investors include Mayor Rahm Emanuel’s brother, Hollywood super-agent Ari Emanuel, rejected the city’s claims about a net loss of revenue.
“In 2017 and 2018, rideshare is on track to generate more than $190 million in new taxes for Chicago residents,” Uber spokesperson Molly Spaeth wrote in an email.
“We look forward to continuing conversations with the city, as it is clear that growth in technology and innovation is key to the future success of Chicago and its residents. … We are confident that the city wants to be — and knows it needs to be — a constructive partner with the tech and innovation industry.”
Lyft spokesman Scott Coriell argued that the ride-hailing industry has “contributed hundreds of millions of dollars in revenue to the city” during its short existence in Chicago and “and continues to do so.”
“It takes some creative accounting to call that a loss for taxpayers,” Coriell wrote in an email. “Chicago already charges the highest ridesharing taxes in the nation, and is now looking to increase those even further.”
Emanuel is putting together a list of “targeted” tax and fee hikes to plug a $259 million hole in his 2018 budget.
But he needs to be careful to avoid getting caught up in the furor over County Board President Toni Preckwinkle’s sweetened beverage tax.
Uber and Lyft are easy targets.
By claiming that the shift from cabs to ride-hailing is a net loss for taxpayers, the mayor appears to be laying the groundwork to increase both the per-ride surcharge and the $5 fee on airport pickups and drop-offs.
Last week, Uber started playing offense.
The company released a study claiming that its 30,000 Chicago drivers — the majority of whom live on the South and West Sides — together collected $210 million in earnings during the first eight months of this year. That’s $7,000 apiece.
Uber also reported that 44 percent of its Chicago trips started or ended in South and West Side neighborhoods, where taxicab service has been sporadic at best.
Ald. Anthony Beale (9th), City Council champion for the taxicab industry, has said the Uber figures would have no impact on his plan to rein in surge pricing and require ride-hailing drivers to be fingerprinted.
After a false start last month, Beale plans to try again Wednesday to push both measures through the Transportation Committee he chairs.
Uber and Lyft have long maintained that a background check based on FBI fingerprinting would discriminate against minorities who are “far more likely to have an interaction with the criminal justice system” — and often for minor, nonviolent offenses where the charges are dropped but the record has not been expunged.
Beale has ridiculed that “sky-is-falling” warning and dared Uber and Lyft to “walk away from billions of dollars.”
He has portrayed fingerprinting as pivotal to riders’ safety because it’s the “one way to make sure a person is who they say they are.”