In one of two suggested models - based on overseas examples - the maximum fares would be set by the operators. In the other, the upper limits would be decided by the government and the operators would have to apply for permission to charge less.

In both cases, there would be more than one charging rate and the fares would be subject to regular adjustment by the trade. Drivers would have to list charges in their cars.

The proposals received a wary response from drivers, with one saying it could lead to an overall fare reduction and loss of income for all drivers.

They are based on practices in Singapore and Tokyo, two of the four cities studied by the Transport Advisory Committee.

Committee chairwoman Teresa Cheng Yeuk-wah said the committee did not have any preference at this stage. 'We will analyse views received from the trade and the public before formulating options for further consultation with them,' she said.

Members of the committee have visited Singapore, Tokyo, London and New York since it was commissioned in April to research ways of improving the taxi trade's competitiveness.

The study comes as increasing numbers of taxi operators are touting for passengers by offering discounts of 20 to 40 per cent on long-haul trips, which law-abiding drivers say is forcing them out of business.

While it is illegal for drivers to offer discounts, bargaining by passengers is not, causing the practice to flourish.

Jim Chi-yung, head of the committee's public transport services subcommittee - in charge of the review - said fare bargaining by passengers was not an offence in any of the four countries studied, but none experienced discounting problems similar to Hong Kong because demand for taxi services in those cities far exceeded supply.

'In New York or London, you can't find an empty cab at peak hour even if you wish to pay more, so why would the drivers offer you a discount,' he said.

Taxi pooling - also illegal in Hong Kong - is allowed in all four cities.

Professor Jim said each city had its own special reasons for its policies and Hong Kong should not copy blindly from them. 'In many cases, taxis are the only transport option for passengers in all four places, which is why taxi pooling, or fixed charges on a particular route, would be allowed,' he said. 'But in Hong Kong, we have minibus and night buses, and such policies would certainly have an impact on them.'

Taxi driver Kwok Chi-piu said normalisation of discount taxis was not feasible in Hong Kong because all drivers would be forced to lower their fares in the face of competition and that would lead to a drop in income.

'Taxi drivers in Tokyo are employees of big corporations, but in Hong Kong many are still individual drivers who shoulder their own losses,' he said.

Taxi owner Brandon Tong Yeuk-fung agreed but said the city could consider taxi pooling and fixed prices for long-haul trips, such as between Tsim Sha Tsui and the airport.