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City parking tax plan OKd: The more you pay to park, the higher the tax

Scott Stewart~Sun-Times file photo

Scott Stewart~Sun-Times file photo

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Updated: May 10, 2013 6:15AM

Mayor Rahm Emanuel’s plan to change Chicago’s parking tax — from a sliding scale to a fixed percentage — got the green light Monday despite concern that hotel patrons who drive to the city and park overnight would pay through the nose.

Under the current, sliding-scale, the most motorists can pay in taxes is $5 for a parking fee of $12 or more. That’s even on a valet parking tab of $50 at a luxury downtown hotel.

The new structure, approved by the City Council’s Finance Committee, includes a flat tax of 20 percent on weekday parking and 18 percent on weekends. The more you pay to park, the higher the tax.

Marc Gordon, president and CEO of the Illinois Hotel and Lodging Association, said 18 percent of the people who stay in Chicago hotels drive to the city and park overnight. They pay an average overnight parking fee of $42.31. High-end hotels charge $50-a-night.

Under the mayor’s plan, those same motorists who were paying $3 in taxes in 2011 and $5 now would pay anywhere from $8.62-to-$10 in taxes. That’s more than triple the tax in less than two years, he said.

“It has a severe impact on our hotels and the overnight guests who stay there,” Gordon said.

“These are the guests who come in and stay in our hotels and spend their money in our city and pay the taxes and do all the good things that have a tremendous effect on the city’s economic [health] — $12 billion is what tourism brings to the city.”

Ald. Walter Burnett (27th) added, “We’ve been blessed to have an increase of heads in beds. We want to make sure we keep it that way.”

Instead of 20 percent on weekdays and 18 percent on weekends, Gordon suggested a flat rate of 15 percent at all times. That would soften the blow on hotel patrons who sometimes park their cars for up to five nights, he said.

Ald. Jason Ervin (28th) was not sympathetic.

“Why is parking so high to start with? The amounts I’ve seen in some of these hotels are just ridiculous. That probably has a greater detriment [than the tax]….I’ve seen rates of $45-to-$50 for overnight parking. You can get a room at Midway for that amount,” Ervin said.

Budget Director Alex Holt argued that a percentage-based tax is more equitable.

“The idea behind this structure is….to make it easier to administer, but also to more fairly distribute that tax based on what people are paying. If you’ve got a premium service, you will pay more. If you’re paying an economy rate, you will actually pay less,” Holt said, noting that 50 percent of Chicago parkers pay $12 or less.

“[Hotel] garage rates tend to be $50 and up. As a result of the percentage-based tax, those parkers will pay more. Currently you’re paying less than your share of the tax and the economy parker is paying more. This percentage-based fee evens that out.”

Holt noted that most major cities impose a percentage-based parking tax. In New York City, the tax is 18.4 percent. In Philadelphia, it’s 20 percent. San Francisco imposed a 25 percent fee.

The mayor’s 2013 budget includes $122 million in parking tax revenue. The annual take should remain in the “$122 million-to-$125 million range” even after the restructuring, the budget director said.

“We worked backwards from that number and figured out where the percentage rate should be. We wanted to be in that range of revenue-neutral. We did not structure it to result in an increase in revenue. We structured it to stay revenue-neutral,” Holt said.

Emanuel’s first budget was balanced, in part, on a $2-a-weekday hike in parking taxes cleverly billed as a “congestion fee” even though it was confined neither to rush periods nor congested downtown and River North areas.

The full City Council is expected to approve the parking tax overhaul on Wednesday, effective July 1.

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