The delivery tax idea was introduced very late in Session, a time-honored method used by Democrats to introduce bad ideas at the last minute to give limited time for feedback or transparency. With Chicago’s Regional Transit Authority (RTA) facing a reported $770 million deficit, several tax hikes were proposed, along with an overhaul of the entire transit system, as part of HB 3438.
The Retail Delivery Climate Impact Fee Act, as the Democrats termed the legislation, would impose a $1.50 ‘climate impact’ fee on or after January 1, 2026, on each retail delivery that includes at least one item that is subject to state sales tax and delivered by a motor vehicle to a location within the state. There could be some exclusions, including prescription drugs and grocery items, but the verbiage was vague. The tax would be imposed on any home delivery order placed online. Of the funds raised, 80 percent would go to the Chicagoland transit systems and 20 percent would go to downstate transit agencies.
The proposed delivery tax was universally panned by restaurants, small businesses, and major delivery services; and considering how reliant senior citizens and those with mobility issues are on delivery providers, this tax would be especially burdensome to vulnerable populations. Large third-party couriers such as DoorDash and Uber came out with harsh public statements on the proposed tax, and the backlash helped to stall the bill in the House. For now.
The Chicago transit situation remains dire, with a ‘looming fiscal cliff’ continuously being reported. Thousands of jobs could be lost, and transportation corridors could be interrupted, delayed, or eliminated in the Chicagoland region if the funding issue is not addressed soon. Lawmakers will be under big-time pressure to address the situation during the upcoming Veto Session in October, and there is always the possibility of a Special Session being called this summer.
With their backs up against the wall, Democrats will likely cave at some point and pass a package of tax hikes to rescue the transit system in Chicago. And with the continued rise and popularity of delivery services in the state and country overall, Dems could easily see dollar signs and a major revenue source there for the taking. The delivery tax may not have been implemented yet, but the danger remains high. Illinois residents and businesses must remain vigilant and oppose this egregious, costly, and unpopular tax hike.