Chicago's mayor has proposed requiring third-party food delivery companies to collect and remit the city’s restaurant tax, part of a pandemic business recovery relief package.
Mayor Lori Lightfoot (D) on May 26 introduced an ordinance that would require food delivery companies to collect and remit the city’s 0.5 percent restaurant tax. Under the legislation, delivery companies such as Grubhub, Seamless, and DoorDash would be required to remit the tax to the city Department of Finance rather than the restaurants they deliver on behalf of.
Delivery companies that do not comply would be not only held liable for the tax but also pay interest and other penalties.
Critics argue that third-party food delivery companies often charge exorbitant fees and surcharges that not only hit customers but also adversely affect restaurants. They complain that the fees must be paid by the often small, independent restaurants. Third-party delivery companies, however, contend that they have drawn added business for those restaurants, especially during the pandemic.
The proposed ordinance is included in Lightfoot’s “Chi Biz Strong” package of financial, regulatory, and other relief proposals floated May 26 that she says will provide for business economic recovery in the city. Her plan would also extend until the end of the year the 15 percent cap on food delivery fees; the cap expired April 17.
The Chicago City Council must approve Lightfoot’s proposal. If enacted, the food delivery tax ordinance would take effect July 1. Lightfoot, however, noted that the city comptroller could delay the effective date to no later than October 1 if needed.
Restaurants in cities in the United States have been hit hard by closures and diminished service as a result of the coronavirus pandemic. Chicago’s restaurants remain at 75 percent capacity as coronavirus restrictions ease.