Lightfoot’s rideshare fee plan improves equity, but why not tax Uber and Lyft directly?

The mayor’s proposal to relieve congestion and boost public transportation will cost solo riders in affluent areas the most, but there are other, more progressive options.

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Mayor Lori Lightfoot’s proposed congestion fee for rideshare companies is being called regressive by Uber and its supporters — including some ministers who participated in a previous Uber campaign that Streetsblog Chicago characterized as “astroturfing.”

But transportation advocates who earlier called on Lightfoot to include equity concerns in planning around congestion pricing don’t agree. Elizabeth Irvin, transportation director at the Center for Neighborhood Technology, says the new fee structure “is a more equitable structure than the current system.”

Contrary to a new poll by a coalition opposing the congestion fees that includes Uber and Lyft, the new fee structure would not in fact “harm the city’s African American and Latino communities the most.”

That’s because the new fee structure reduces the ground transportation tax slightly for shared rides in neighborhoods and wheelchair users and raises it for solo rides and for downtown rides during periods of congestion. That means the great bulk of new revenue will come from rideshare users in affluent areas – areas where the great bulk of rideshare trips occur, and areas that are also particularly congested but feature lots of public transit alternatives.

According to CNT, 71% of solo rides begin or end on the North Side, Loop, Near West Side, or Logan Square, while according to the city, most South and West Side users opt for a shared ride. Indeed, a city study found that in much of the West Side, the proportion of users taking solo trips ranges from 32% to 43%. And about 90% of South and West Side trips do not go downtown. 

CNT estimates that average fees will increase by 25 to 50 cents in most of the South and West Sides, compared with average increases of more than $2 for downtown rides. Of course, the fee is intended to encourage more users to opt for shared rides – or if they’re downtown, to use public transit – so the increase in the neighborhoods is likely to be lower.

Meanwhile, according to the city’s study, the Chicago Transit Authority has lost nearly 48 million rides annually since 2015, a period when the number of rideshare trips nearly tripled. The areas with the highest number of rideshare trips – the Loop, Near North Side, Lakeview, Lincoln Park, Near West Side, and West Town ­– have also seen heavy CTA ridership declines.

A portion of the $40 million expected to be raised by the higher fees will go, along with federal and state funds, to a major expansion of CTA’s bus priority zone program in the neighborhoods. That will improve efficiency and make public transit a more attractive alternative.

Still, a far more progressive way to raise revenue would be to directly tax the big rideshare corporations, including Uber and Lyft, said Anders Lindall of AFSCME Council 31, which includes Cab Drivers United/AFSCME Local 2500.

“We’ve called for the city to make vehicle license fees for rideshare companies equivalent to what cabs pay, which is $250 a year in the new budget,” Lindall said. Lightfoot has proposed cutting the existing $500-a-year license fee in half. “We can raise more revenue by making the billion-dollar corporations pay,” he said.

Currently rideshare companies pay licensing fees of $10,000 a year plus two cents per trip, totaling about $2 million a year for the entire industry.

To more directly address congestion, Cab Drivers United has backed demands by rideshare drivers to cap the number of rideshare licenses in the city. The union has collaborated with Chicago Rideshare Advocates in calling for a moratorium on new licenses, arguing that an unlimited number of drivers on the road makes it harder for anyone to earn a living wage.

Lindall points to New York City, which recently extended a moratorium on new rideshare licenses for another year. He said the union also supports legislation recently passed in California requiring app-based companies to treat workers as employees rather than contractors, giving them access to minimum wage and overtime protections.

So the mayor’s proposal is not regressive, and it will make a start at reducing congestion and improving public transit. But to meet those goals and raise revenue, Lightfoot should consider more direct approaches.

Correction: An earlier version of this post inaccurately stated the full amount rideshare companies pay the city in licensing fees.