Chicago, USA — The City Council recently approved the proposed $3 tax on solo ride-share trips downtown. According to reports, the tax hike will help shrink a massive estimated $838 million shortfall in the 2020 budget.
The proposal would double the current .25% tax on food and drinks sold at retail establishments and restaurants. This is nothing but a fraction of the levy Chicago diners pay every time they eat out. In fact, the sales tax in Chicago is 10.25 percent, one of the highest in the nation.
Furthermore, the decision is part of a larger trend of cities pushing back against companies such as Uber and Lyft. Both companies, and the rideshare industry in general have been largely unregulated since they burst onto the urban scene.
“As part of a number of revenue solutions we are contemplating, we are asking those dining out to chip in an additional 25 cents for every $100 restaurant tab,” Lightfoot said in a statement.
New York-based Schaller Consulting Bruce Schaller believes that the proposed fees will also reduce traffic congestion on the Loop.
“I think with $3 you’ll get to where people will actually start changing behavior,” Schaller said. “This sends a bunch of good signals as to what the city’s values are, and what kind of city you want to be.”
Meanwhile, rideshare companies are criticizing the proposed tax increase. They claim that it would hurt low-income areas, which are currently underserved by both cabs and mass transit.
“The mayor’s proposal shows a total misunderstanding of what causes congestion and how Chicagoans are moving around the city,” said Lyft spokeswoman Campbell Matthews.
Bryant Greening, co-founder of Legal RideShare, said that he is concerned about rideshare drivers. According to him, the proposed new fees will result in less demand. However, he also admitted that the tax probably will ease congestion, and may aid the beleaguered taxi industry.
“It’s going to hurt drivers, there are no two ways around it,” said Eli Martin, a rideshare driver and co-founder of Chicago Rideshare Advocates. “Drivers are already in a very precarious situation.”