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Uber’s lawsuit over fees in Skokie may foreshadow struggle in Chicago

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The ride-hailing company claims it violates state law

Cars on an expressway travel to a downtown center with tall towers.
Chicago expressway.

Uber is arguing that Skokie’s hike in fees on ride-hailing services violates state legislation, according to a lawsuit filed Wednesday against the northern suburb. The outcome could impact similar ride-hailing fees across Illinois including Chicago’s proposed changes—and that’s exactly what Uber hopes.

The Skokie ordinance, which was approved in May and set to begin Wednesday, adds a 15 cents to shared trips and a 35 cents to individual trips that begin or end in the suburb. Skokie officials did not immediately respond to a request for comment. Similar to Chicago, Lightfoot’s plan is to impose higher fees on individual trips that begin or end in the downtown area.

Uber’s main argument against Skokie’s tax is that it will apply to services outside Skokie’s jurisdiction—the company says 86 percent of Uber trips beginning or ending in Skokie crossed borders in the first nine months of 2019. It also claims the fee illegally taxes an occupation and that there is no evidence that the revenue is needed to offset the increased wear and tear on Skokie roads, according to the complaint that Uber provided ahead of filing on Wednesday.

“Our belief is that the Illinois Constitution forbids any municipality in the state from imposing occupational, extraterritorial, or arbitrary taxes. A positive ruling in this case would likely impact Chicago,” a representative from Uber said.

A rep from Uber clarified that Uber isn’t against fees or taxes, but having numerous municipalities across the state institute a “patchwork” of legislation isn’t a solution. When asked for an example of an ideal fee structure, Uber pointed to New York City’s congestion pricing which will go into effect at the end of 2020.

Unlike Chicago, NYC follows a tolling structure that applies to all drivers entering the central business district. Right now, Chicago’s fee just applies to riders using Uber, Lyft or Via—it excludes delivery vehicles, trucks, and taxis.

During Lightfoot’s announcement about the budget and new sources of revenue, the mayor mentioned how the new ride-hailing fees would help taxi drivers. The Uber representative commented on this, saying that legislation aimed at easing congestion while also benefiting taxi drivers, which in part are responsible for congestion, wouldn’t fix the problem. Construction and delivery vehicles are also factors in congestion and traffic, but aren’t included in the fee structure, the rep added.

According to a statement from the mayor’s office shared with Crain’s, city officials don’t view the lawsuit as having any influence on Chicago legislation.

“The new measures proposed by the mayor are simply a modification of the ground transportation tax that has been in place for decades and has applied to rideshare operations since they were first allowed in 2014. Chicago absolutely has the authority to tax rideshare companies, just as it has the authority with taxis and limos. We are confident that a company like Uber has the ability to adapt and comply.”