Government should issue new, short-term licences of taxis in Hong Kong
There was an illuminating debate on RTHK’s Backchat programme on Monday, in connection with the proposed 18 per cent increase in taxi fares – frozen for the past three years.
Taxi drivers on average earn 20 per cent less than drivers of other vehicles and virtually no new taxi licences have been issued in Hong Kong (apart from Lantau taxis) since 1997. The Lantau licences attracted bids of over HK$5.6 million each.
There are 18,163 taxi licences in Hong Kong (compared with 520,000 private cars). In Singapore, with a population about 35 per cent less than Hong Kong’s, there are 28,000 licences.
On a proportionate basis, Hong Kong should have 36,000 licences.
Pressure is put on the government by the few taxi licence owners who have seen the value of their licences increase substantially in value over the years without a commensurate increase in drivers’ income or service for the public.
It is nonsense that Hongkongers have to pay much higher prices than would be the case if fares did not have to include the monopolistic cost of the high “value” of the licences.
The government has failed to take action over this inequity and the problem gets more serious every year.
As David Webb pointed out during Backchat, the government should issue as many licences as the market can bear, subject to an agreed taxi fare rate to be set periodically, also by the government.
Consideration should be given to the cancellation of existing licences, and new short-term annual licences should be issued to any qualified applicant on the basis of an agreed annual fee payable to the government.
On the basis of a HK$150,000 annual fee, the government would collect HK$2.7 billion per year based on 18,000 licences (HK$5.4 billion on the basis of 36,000 licences). The annual charge would represent a daily cost equal to the HK$400 shift charge, that is, one third of the current cost. The government could then use this income as compensation for current taxi licence owners.
This compensation should be limited to HK$ 2 million per existing taxi licence, excluding the recently issued Lantau licences which would have to be separately considered.
This compensation would represent a considerable profit to the vast majority of owners, mainly speculators who bought well before 1997 and who have enjoyed a good annual income from the licences over the years.
Serious reform of the system is called for.
David Paterson, Mid-Levels