IT'S raining; all the taxis in Hong Kong have disappeared. Typhoon signal No 8 is hoisted; a driver offers to take you home for an extra $100. A Wan Chai street is full of cruising cabs one sunny lunchtime; but none will stop. An out of service sign becomes a bargaining ploy. Welcome to the world of Hong Kong taxis, where once the rules were strict enough to protect the customer, but where now many feel they are being taken for a ride. So when the Transport Advisory Committee (TAC) endorsed a blueprint last month to allow flagfalls for red cabs to go up from $9 to $11.50, any understanding of the drivers' financial plight went out of the car window. The plan, which will come into effect in November if it receives the approval of both the Executive and Legislative Councils, will increase fares by an average of 17.7 per cent. According to TAC, this will have a dampening effect on the demand for taxis which in turn will discourage drivers from cheating the customer. Government statistics show, to no one's surprise, that the number of complaints against taxis refusing hire or soliciting passengers are increasing. For the first six months of this year, complaints totalled 301. There were 206 for the same period last year; 168 the year before. At the same time, taxis clocked up 663 complaints for all malpractices in the first six months of 1991. There were 1,279 in the same period this year. It was figures such as these that prompted the police to clamp down on the taxi cheats last week in Tsim Sha Tsui East. Sixteen drivers were arrested in the three-hour operation. Cheating is at its worst in the taxi black spots, and a trip to the Tsim Sha Tsui East entertainment zone was most revealing. At 11.30 pm, a steady stream of ''out of service'' taxis began to move into a narrow side street off Mody road, waiting patiently outside nightclubs and restaurants, and directly opposite a hotel. While some chose to circle endlessly, others double parked and partially blocked off roads. They would only inch forward to give way to private vehicles which honked to get through. Half an hour later, as the size of street crowds began to swell, so did the fleet of taxis waiting. But waiting was all they did. Groups of businessmen, tourists and locals who approached were turned away. ''Harbour crossing only,'' one taxi driver said as he pointed at the red ''Out of Service'' sign, but when offered an extra $100 on top of the normal fare, he swung the door wide open and said ''hop in''. Yet, the Urban Taxi Drivers' Association chairman, Mr Chan Kam-pui, insists taxi services are not too bad. There are only on average four complaints each day, he says. ''You must understand there are many reasons why taxi drivers refuse hire. Some have to do so if they are about to change shift,'' he said. But the public knows better. According to the Holiday Inn Golden Mile Hotel doorman, between 2.00 pm to 5.00 pm is when taxis refuse to take on hires. They choose their passengers in front of the hotel doorstep. ''They are simply not interested in taking our guests to Tsim Sha Tsui East or nearby areas like Yau Ma Tei. What I don't understand is that neither do taxi drivers want to go to the Hong Kong side. It seems strange that they want neither short or long distance passengers,'' the doorman said. However, all drivers would take guests to the airport. ''Probably because there are extra charges for the luggage,'' he said. ''What we do is to advise our guests to enter the taxi first, then tell him the destination.'' Another hotel doorman who works in Tsim Sha Tsui East said some taxis drove slowly passed the hotel driveway to choose their passengers. ''If the passengers are locals, the taxi will just drive away. And in my five-years' experience in Tsim Sha Tsui, taxi drivers prefer to pick up Japanese tourists.'' SO, what do taxi drivers have to say in their defence? A whiff of cold air gushed out of Mr Lau Cheung-kun's five-seater red cab. Here is where he works from 7.00 am every day - nine hours a day, six days a week. And this week, he is annoyed. While inching slowly in the middle of traffic congestion on the Eastern Corridor at 3.15 pm, he said the recent bad publicity given to taxi drivers has been unfair. While he admits that there are bad elements, he blames both the public and the Government for making taxi services the way they are. ''For nine dollars, does the public really expect five-star hotel treatment and a smile on our faces?'' said the 42-year-old taxi owner/driver. ''People don't seem to realise the demand for taxis is so great now that there are simply not enough of them to go around the territory. ''Yes, there are those who put on the 'Out of Service' sign, but many of them are either already booked [through call-a-cab] or they don't want to get themselves in a congested area. ''During the rush hours, everyone wants a cab, especially in areas like Wan Chai and Central. And when the whole area gets completely congested, we can spend more than 30 minutes on a journey for just $30; it's not worth it. Time is very important in ourbusiness.'' A normal shift costs the drivers a minimum of $500 (including rent and fuel) while a trip generates, on average, $15 revenue. Mr Lau said that when people get desperate, they offer drivers extra money, sometimes up to $100, and it is this practice which some exploit. The Government's existing policy is to maintain a fare differential of five to seven times between urban taxis and other forms of public transport. In reality, says Mr Lau, this is not really the case. ''This morning, I took five school girls to school for a nine-dollar journey. If they took the MTR, it would have cost them $15,'' said Mr Lau, who has been a taxi driver for about 16 years. ''Too many people exploit the taxi service nowadays. They could really use other forms of transport such as buses and minibuses. Now there are not enough taxis for those who really need them. ''The Government must start looking at the whole transport system, maybe introducing more bus routes to areas presently not reached by public transport.'' He also suggested that the Government should relax some of the stopping restrictions for taxis to relieve traffic congestion as well as passenger flow. Mr Lau wrote to the Government during the consultation period on the taxi policy review. ''I am independent from other taxi groups in my views as I don't belong to any association. People within the taxi trade come from different backgrounds. A lot of them are gamblers,'' Mr Lau said. ''In fact, taxi drivers are very independent, it is very hard to consolidate them together as there is so much conflict of interest between them.'' While the Government recognises the urgency of the problem and has already spent two years working on a solution, no concrete action or legislation has yet materialised. BUT what really makes hailing a taxi such a hellish experience in the first place? According to Phil Taylor of the Automobile Association (AA) the problem lies in the historic system of auctioning licences to the highest bidders. ''We have had, for the last 30 years, a system in which people own licences but do not run taxis. They sub-let the licence to somebody who would perhaps run the taxis or sub-let the taxi to the taxi driver,'' he said. ''And the taxi driver at the end of the line is running around trying to make a living and causing the sort of problems we have. It's the system that is wrong.'' Appointed Legislative Councillor Mrs Miriam Lau Kin-yee, convenor of the Legco Transport Panel, agrees and has long urged the Government to put an end to the present licensing system. ''And because it's the motor vehicle companies who control these new licences and it's also in their interest to keep the price high, the value of licences will never come down if the existing system continues,'' she said. A quick glance at the value of taxi licences over the last few years illustrates her point. The average tender premium in 1991 was HK$1.5 million while it was only $900,000 at the end of 1990. ''By 1992, the premium actually soared to $1.8 million,'' Mrs Lau said. And there is no governing or professional body which makes sure the 40,000 taxi owners, operators and drivers are following their codes of conduct. At the moment, they all belong to different regional interest groups and associations. ''But an association does not mean anything. It can't tell members what to do, neither can it be held responsible by the Government,'' Mr Taylor said. ''Licensing speculation has resulted in no effective management of taxi drivers. It is difficult to control them and as a result we rely totally on the police to enforce the law which I think is unfair [on the police].'' Mrs Lau believes it is the diverse interests and a lack of overall management in the taxi business which accounts for poor taxi services in Hong Kong. ''Here we don't have, like some countries, a state owned taxi operation, where there is management control from top to bottom. Instead, we have various interest groups,'' she said. It was also unfortunate that traffic was a low priority area for the police. ''They do from time to time enforce the law against taxi malpractices, but that is done only sporadically, it's by no means a regular exercise,'' Mrs Lau said. ''It's very difficult to ask the police to check on taxi drivers, making sure that they don't malpractise, around the clock and throughout the whole year. But I believe more effort should be done in this area.'' According to a spokesman for the police force, the traffic department is now working closely with the Transport Department to stamp out illegal practices. Complaints procedures are another area for study, says Mrs Lau. At present many see them as cumbersome and a waste of time. The public rarely bothers and, according to the Transport Complaints Unit, only half the number of complaints make their way to court. She believes the system should be streamlined. ''At the moment, it is difficult to complain against [the taxi driver]. The person doesn't know who drives the vehicle and sometimes omits to take down the number,'' she said. Like other concern groups and the public at large, Mrs Lau is waiting to see the finalised Taxi Policy Review which she believes is long overdue. While the Transport Department declined to comment on the review policy which was reported to be finished later this year, the chairman of the TAC working group said its completion was not an immediate priority. ''We are now working on 20 proposals, and we are working hard to make sure that our principles will create a better trade and system. And that is very difficult,'' said Professor Tenny Lam Chung-yu. ''We have now 20 different measures which government staff need to go into in detail and study . . . [the implementation of the policy review] will require changes of law, so there are legal as well as implementation questions to considered. ''Another problem is that there are so many different points of view which we have to take into consideration. We have to consider measures that will be feasible, fair and just to all groups and not at the expense of the public.'' But no matter how long the formulation of the review will take, the outcome better be good, according to Mrs Lau. ''We appreciate the difficulties behind the problem . . . but if they get it wrong, it will be disastrous. So I think they better get it right this time,'' she said.