Industry says taxi buyout not fair

The government has proposed a measure to help the struggling taxi industry reduce the number of cabs by contributing 13 million won ($11,400) to buy back licenses of individual drivers.

The Ministry of Land, Infrastructure and Transport said a taxi industry bill was approved by the Cabinet yesterday and will be submitted to the National Assembly tomorrow.

Under the bill, the ministry aims to buy back taxi operating licenses from drivers and prohibit local governments from issuing new ones.

According to the ministry, 70 percent of the 13 million won per vehicle would come from local governments, with the remainder from the national government.

However, this plan has already created controversy because the proposed compensation is a fraction of the value of taxi licenses, which trade for 70 million won to 100 million won depending on the region. The ministry said it wants the industry to make up the difference.

However, three out of four major taxi associations oppose the government’s plan, and remain in favor of designating taxis as a form of public transportation like subways and buses.

The National Assembly earlier amended a law to do just that, but it was vetoed by former President Lee Myung-bak.

The ministry said it understands that buying back licenses would be a burden to the industry and has eliminated two other provisions that were initially proposed: limiting the number of taxi license trades to three and requiring aptitude tests for drivers aged 70 or older.

The government aims to reduce the number of taxis in the country by 50,000 over five years. Industry insiders estimate there are 255,000 taxis nationwide.

The ministry will conduct a nationwide investigation next year to determine the precise number of taxis operating and draft a reduction plan by region. Actual buybacks of taxi licenses are expected to begin in the second half of next year, according to the ministry.

If local governments or the taxi industry drag their feet, the ministry may reduce oil subsides and shift the savings to the buyback fund. According to the ministry, more than 450 billion won is spent annually on the subsidies.

Along with the reduction plan, the new bill also includes creating a welfare fund for drivers, building public parking lots, supporting compressed natural gas (CNG) taxis and charging stations, and prohibiting taxi companies from passing oil and maintenance costs on to drivers.

In addition, the ministry strengthened penalties for drivers who refuse to take customers, reject card payments and use other people’s licenses. It also asked the companies to establish a taxi service management system.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]