Taxi users ripped off again

As I noted in May, it is nearly 30 years since the CIS started publishing critiques of taxi regulation, with the most recent publications being Jason Soon’s 1999 paper and Krystian* Seibert’s 2006 Policy article.

The basic problem is that taxi licences are limited in number, and are sold for huge sums. Jason’s article reported that a Victorian taxi licence cost $265,000 in 1998. 10 years on an Essential Services Commission report put the licence cost at nearly $480,000. The cost of servicing this capital adds massively to the cost of running a taxi, and adds significantly to the fares paid by taxi users. Taxpayers suffer too in having to subsidise taxi use by some disadvantaged groups.

The ESC report points out other problems in the industry as well, such as the depots to which taxis must be affiliated and pay fees which are ‘likely to include an element of “monopoly rent”. ‘

In its latest round of fiddling at the edges of the issue, the Victorian government has announced some extra licences and a fare increase of 6.1%, taking the total fare increases to more than 10% for the year. It also offers what I think is irresponsible investment advice:
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