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Here’s How The New Cellphone Tax Will Affect You

By Heather Cherone | October 20, 2017 8:13am | Updated on October 20, 2017 8:19am
 The city has raised phone taxes twice in the last three years — from $2.50 to $5 per month per line.
The city has raised phone taxes twice in the last three years — from $2.50 to $5 per month per line.
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CITY HALL — Mayor Rahm Emanuel's 2018 spending plan raises the city tax on cellphones and landlines by 28 percent — the second double-digit phone tax hike in three years.

Here's what it will mean to you.

How much is it?

For every cellphone registered to a Chicago address and every Chicago landline, the city will tack on a $5 per month charge — up from the current charge of $3.90 per month.

When does it start?

The City Council still needs to sign off on the idea when it considers the proposed budget Nov. 21. But the approval is near certain with aldermen unlikely to favor a citywide tax increase.

Consumers would see the higher taxes reflected on their bills starting Jan. 1.

When was the last time the rate went up?

The City Council last raised the phone tax in 2014, when aldermen approved a 56 percent increase as part of an effort to keep the laborer's pension fund from sliding deeper into the red.

Chicagoans' phone taxes will have risen 100 percent in three years — from $2.50 per line per month to $5 per line per month.

Was anyone against this?

In June, the anti-tax group Illinois Policy said Chicagoans already paid the highest in the nation 911 surcharge.

Sixth Ward Ald. Roderick Sawyer said Wednesday he was concerned about the phone tax hike, calling it "somewhat regressive."

But he had no suggestions on how to come up with the $26 million the proposed tax hike is expected to generate and help balance the city's $8.6 billion 2018 budget.

RELATED: Comprehensive coverage of Emanuel's 2018 budget

What's the money for?

The hike was originally part of a bill passed by both the Illinois Senate and House that required cities and counties to modernize their 911 systems — and allow them to hike phone taxes to foot the bill.

Republican Gov. Bruce Rauner vetoed the tax hike, calling it "a massive tax hike on Illinois families and businesses" that was part of a "mean-spirited strategy" on the part of Democrats.

But undeterred by the governor's veto, the General Assembly included a measure to give cities and towns the authority to raise phone taxes in the $36 billion spending plan it passed in July. Rauner vetoed the entire spending plan, only to have his action overridden by lawmakers.

The state budget also allows Chicago to pay more toward the pensions of about 88,000 city workers while changing the way pensions work for employees hired after Jan. 1.

New employees could retire at age 65 after contributing 11.5 percent of their salary annually to their pensions — 3 percentage points more than employees contribute now. Employees hired after Jan. 1, 2011, could chose to contribute 11.5 percent to their pensions and retire at 65 or keep paying 8.5 percent and work until they are 67.

The mayor plans to use the revenue from the phone tax to shore up the 8,000-member Laborers Pension Fund — freeing up other city funds to modernize Chicago's 911 and 311 systems "for the mobile, smartphone era," as Emanuel said in his budget address.

Alicia Tate-Nadeau,  executive director of Chicago's Office of Emergency Management and Communications, said in April that the new system will allow Chicagoans to text 911 for help — and to send photos and videos to give police officers and firefighters an immediate look at the situation.

The current 20-year-old system is "clearly past its time to be replaced," Tate-Nadeau said.