Rideshare services such as UberX and Lyft are booming in Chicago. But like anything else making money on their turf, Chicago politicians want a bigger cut.
Alderman Ed Burke, 14th Ward, persuaded Mayor Rahm Emanuel to include a $1-per-ride surcharge on cab rides and rideshare services as part of the mayor's proposed package of tax increases for 2016 – the largest tax hike in modern Chicago history. Burke estimates the surcharge would raise $70 million annually.
Uber spokesperson Brooke Anderson confirms the new tax would be the highest tax on rideshare services in the nation.
But that's not enough for Burke. He and Alderman Anthony Beale, 9th Ward, proposed on Sept. 11 additional taxes on rideshare services for surge pricing. (In order to entice more drivers to meet "surges" of demand, Uber and Lyft raise the price of rides during these times.)
Burke and Beale want the new tax to surge, too. If Uber doubles prices during inclement weather to get more drivers on the road, for example, the $1 tax will double to $2 per ride. The surge taxes wouldn't apply to traditional taxis because the city sets their fares, and their prices don't fluctuate in response to demand.
So what's with Burke's rideshare vendetta? He and Beale also introduced an ordinance last year that would have heavily restricted ridesharing in the Windy City. It failed to pass.
Burke has a history of financial ties to the city's taxi industry – yet votes on the rules that govern it.
"Taxi Work Drives Burke Into Latest Conflict Corner," reads a March 1997 headline by Greg Hinz at Crain's Chicago Business. Hinz found that while Finance Committee Chairman Burke's law firm had business with Chicago's largest cab company, Yellow Cab, Chicago's City Council voted three separate times to boost taxi fares to the benefit of cab companies' bottom lines.
Even before Burke headed the city's Finance Committee, a post he's held for more than 30 years, he was at the center of controversy surrounding Chicago cabs. A fare hike approved in 1977 by the Burke-chaired Local Transportation Committee led then-Consumer Sales Commissioner Jane Byrne to charge that the hike was "greased" by then-Mayor Michael Bilandic. Byrne unseated Bilandic in the 1979 mayoral election.
A review of Burke's financial disclosure records since 2008 does not reveal any apparent financial interest in the city's cab industry. But those who do have a stake in the rideshare industry, such as 74-year-old Chicago Uber driver Jim Evans, aren't too happy about the proposed tax. Evans has driven for Uber for two years.
"Unbelievable," Evans said when told of Burke's proposal. "We're getting squeezed already on the cost of gas." High gas taxes make Chicago one of the most expensive places in the nation to fill up.
"Who will be hurt? The consumer will be hurt," Evans said.
"[Uber's] not killing the cab industry, the cab industry killed [itself]. A lot of their drivers are driving for Uber instead of the cab company because they didn't like being hassled."
Emanuel wants Chicago to stand as the "digital mecca of the Midwest," yet city leaders continue to back burdensome taxes on digital services. The city quietly began levying a 9 percent tax on streaming online entertainment, such as Netflix, Spotify and Xbox Live, on Sept. 1.
If city leaders really want a piece of rideshare action, they could generate an estimated $15 million from Uber alone by allowing airport pickups. Instead, officials nickel-and-dime businesses that operate in the Windy City, while protecting established interests.
"The city is going against everything they say they want to do," Evans said.
"Why stifle a business when they come into [Chicago]? What message does that send to other businesses?"
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