An unreasonable hike in taxi fares (KOR)

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An unreasonable hike in taxi fares (KOR)

The Seoul Metropolitan Government held a public hearing on its outline to improve the taxi fare system. It had proposed to raise the basic fare from 3,800 won ($2.8) to 4,800 won and cut the basic distance to 1.6 kilometers (0.99 mile) from the current 2 kilometers to help solve cab shortages in the capital. The city also suggested imposing a night surcharge from 10 p.m. instead of midnight and enabling a maximum 40 percent hike in night surcharge.

But whether its proposal can draw support from citizens amid high inflation is questionable as the proposed basic fare is more expensive than $2.50 in New York and the surcharge rate is higher than 30 percent in London and 20 percent in Tokyo. Taxis could become an expensive transportation means for the rich.

The outline aims to repress demand to solve a shortage in supply. The surcharge option may also not be that effective, because 70 percent of private taxi drivers are aged 60 or over and refrain from late-night driving.

Whether the rate increases can pull in younger driver is also uncertain. The government adopted a regular pay system for cab drivers from 2020. As a result, young drivers have deserted cab driving for better-paying delivery jobs.

Cab drivers for taxi companies in Seoul shrank to 20,710 as of May from 31,130 in January 2019. Unless the pay system designed by the Korean Confederation of Trade Unions changes, young people hoping to earn more money will not be drawn to the job of cab driving.

More sustainable solutions are liberalizing the mobility business. Ride-sharing through Uber or Grab have become common in Europe, the United States and Southeast Asia.

In Korea, mobility business has been restrained since the passage of the so-called Tada ban bill in March 2020. The act that took effect ahead of a general election aimed to appease taxi drivers. As many as 10,000 in the ride-hailing service lost jobs.

The public has been stripped of a convenient ride option and must face expensive cab fares. All countries experience a clash between new and traditional industries. Countries who have succeeded in adopting innovation sought solutions through negotiation between industry and politicians. In the state of Massachusetts, about 20 percent of fare earnings from Uber goes to a transportation infrastructure fund, of which 5 percent subsidizes the cab industry. Singapore requires cab-like qualification from Uber drivers.

Transportation directly affects consumers’ lives. As President Yoon Suk-yeol promised to remove stifling regulations, the government must turn to innovation to enhance public welfare instead of translating growing costs to the public.
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