Chicago plans major tax hike on ride-hailing users

Ride-hailing solo to and from downtown Chicago may soon become very expensive — and Uber and Lyft aren't happy.

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Chicago Mayor Lori Lightfoot plans to take the flat-rate tax of 72 cents per trip and increase it to $1.25 for single rides downtown. The mayor believes the proposed tax hike would not only help to reduce traffic in the downtown area but also lower the city’s $838 million shortfall by raising an additional $40 million each year. The tax fluctuates depending on where a customer is going, but some riders could see up to a $3 increase during peak hours.

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UBERUBER TECHNOLOGIES INC.28.49-0.20-0.70%

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Uber objects the plan, saying it wouldn't solve the city's congestion problems and would require the company to pass the fees onto riders.

"This proposal is about raising revenue, not fighting congestion, and it's disappointing that the Mayor wants to balance the City's budget through a tax increase on communities without access to reliable transportation,” a company spokesperson told FOX Business.

In addition, Uber customers on Monday received messages warning them that the proposed tax hike would “quadruple” current taxes and make it the “highest ridesharing tax in the country.” It also included a link inviting riders to tweet their opposition to the hike to the mayor’s office.

View from above of street and train metro City of Chicago, Illinois, USA

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Lyft also "strongly opposes" the plan, saying the fees "reduce affordability and reliability."

"The Mayor’s proposal shows a total misunderstanding of what causes congestion and how Chicagoans are moving around the city," a Lyft spokeswoman told FOX Business. "Chicago already has the highest rideshare fees in the nation, and this proposal directly contradicts the Mayor's repeated promises to not increase fees that hurt low-income Chicagoans most."

For now, Lyft plans to stay in Chicago due to the popularity of the ride-sharing market in the city.

FOX Business' Grady Trimble contributed to this report.