Proposed Chicago tax would 'surcharge the surge charges' imposed by Uber and Lyft
Under a proposal by two Chicago lawmakers, the city would &ldquo;surcharge the surge charge&rdquo; imposed by ride-hailing companies during peak-demand periods, reports the Chicago Tribune. The basic tax, which also applies to traditional taxis, would be $1 per ride, if the company allows passengers to use apps to arrange a ride. However, if the price of the ride doubles, the private companies would pay $2. And the tax would be upped to $3 if the price triples. In contrast, the tax on taxi rides would remain limited to $1.
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Two Chicago aldermen want a new tax on ride-sharing companies such as Uber and Lyft that would rise when surge pricing kicks in during times of high demand. (Phil Velasquez / Chicago Tribune)

Two Chicago aldermen want to slap a new tax on ride-booking companies that would rise during high-demand times when surge pricing kicks in, with the goal of raising big bucks for the cash-strapped city while leveling the playing field for beleaguered drivers of traditional taxis.

Ald. Anthony Beale, 9th, who chairs the City Council Transportation Committee, said he and Finance Committee Chairman Ald. Edward Burke will introduce an ordinance this month to "surcharge the surge charge" on the ride-hailing companies that are taking an increasing share of the chauffeuring business away from cabs in Chicago and across the country.

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"Right now, (ride-booking companies) are charging three or four times (more) for rides depending on the weather," Beale said, referring to the practice by Uber, Lyft and other companies to increase rates if many people are calling for rides in the rain. "So if they're charging three or four times, we're going to charge them three or four times for what they're doing."

Burke, 14th, already has discussed a plan to add a $1 tax to each fare for cabs and ride-hailing companies, which use apps to allow people to hire a ride from a driver in a private vehicle. Burke said Friday that a $1 surcharge could raise more than $70 million annually.

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The new proposal that Beale discussed would increase the ride-share tax to $2 if the company doubled its fares under surge pricing, or $3 if the rates were tripled.

If the ride-booking companies pass those costs on, then riders always have the option of choosing traditional cabs, where the new tax would remain $1 because fares are set by city statute, Beale said. "Right now, (ride-share companies) are gouging with these surge charges, and if they want to gouge, then I think it's only right that they pass that along to the taxpayers of Chicago to level the playing field for the ride share and the whole taxicab industry," Beale said.

Beale said he had not gotten feedback on the plan from Mayor Rahm Emanuel. Mayoral spokesman Adam Collins did not respond directly Friday when asked if the mayor supports the ride-share surcharge plan.

Uber spokeswoman Brooke Anderson released a statement saying the company opposes the surcharge plan because it would drive up costs for Chicago riders and cut into driver earnings.

Asked late last month about a possible flat $1 surcharge on ride share and cab fares, Emanuel did not rule it out, and he mentioned that Burke had proposed the idea.

Ride-hailing services are linked to credit cards, and rates fluctuate depending on demand, so riders are less likely to notice a dramatic difference. That makes it an easier tax to institute than some others under consideration, such as a garbage collection fee.

Emanuel spent much of his first term at odds with many of the city's roughly 12,000 cabdrivers, largely because they said he was forcing onerous fees on them while going easy on the nascent ride-booking industry. Late last year, as he was seeking re-election, the mayor got a measure of peace with some of his most outspoken critics in the taxi industry by backing an ordinance that lowered several of the fees.

And last spring, the City Council passed an Emanuel-backed ride-share regulation package that set standards for insurance, licensing for drivers and pricing.

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jebyrne@tribpub.com

Twitter @_johnbyrne