Gov`t vetoes bill on taxi law

The government on Tuesday vetoed a parliament-approved bill that would designate taxis as a form of public transportation, citing "excessive spending of budgetary resources" and "equity."

Vice Land, Transportation and Maritime Affairs Minister Joo Seong-ho said in a news briefing, “If taxis are included as public transportation and thus offer discounts to transfer passengers and receives subsidies for operating deficits, an extra budget of about 1 trillion won (942 million U.S. dollars) will be required. (Following the lead of taxi companies), if ferries and chartered buses demand that they also be included as public transportation, this will create problems with equity as well."

In a report submitted to a Cabinet meeting, the Land Ministry said the additional funds required if cabs are designated a form of public transportation will reach an estimated 1.05 trillion won (1.04 billion dollars).

Broken down, the amount would include 656.4 billion won (618 million dollars) in subsidies for deficits due to the semi-public operation of taxis, 219.1 billion won (206 million dollars) in discounts for transfer passengers using cabs, 72.1 billion won (68 million dollars) in costs for the installation of public depots for taxis, 56.3 billion won (53 million dollars) in compensation for reduction of the taxi fleet based on 13,000 fewer vehicles, and 48.7 billion won (46 million dollars) in tax returns for taxi use.

If the 824.7 billion won (777 million dollars) in subsidies for oil and tax benefits that the central, municipal and provincial governments have provided to taxis are included, nearly 2 trillion won (1.88 billion dollars) would be effectively injected into the taxi industry yearly.

The taxi sector rejected the government’s analysis, with one source saying, “The government is raising issue with requests that we haven`t made.” A ranking member of the Korea National Joint Conference of Taxi Associations said, “It`s difficult for taxis to give passengers discounts for transfers because the taxi fare system is different from those of buses and subways. We haven`t demanded discounts for transfer passengers and have no plans to.”

The taxi service industry claims that it will not demand subsides for deficits due to the semi-public operation of taxis. When controversy flared up over the proposed taxi law in December last year, Rep. Lee Han-koo, floor leader of the ruling Saenuri Party, said, “The compensation paid to reduce the taxi fleet will reach 5 billion won (4.7 million dollars) in 2013, but the government is exaggerating the figure.”

On Tuesday, the government recommended that taxi companies accept a “taxi assistance” law that it devised after vetoing the bill. Vice Minister Joo said, “If the land needed for taxi depots is deemed insufficient in urban areas, a measure to lift greenbelts (development restriction zones) could be considered as an alternative, and the government could consider offering welfare funds to help taxi drivers. The measure prepared by the government would benefit taxi drivers, while taxi companies would benefit from the Taxi Act."

On this claim, a source at the taxi associations conference said “The Taxi Assistance Act as suggested by the government is no different from previous taxi-related laws that did not take effect,” adding, “If equity versus other means of transportation is an issue, the government needs to take a comprehensive measure in which the means of transportation in question are considered collectively as public transportation and managed systematically.”

With conflict between the government and the taxi industry reigniting and escalating in the wake of President Lee Myung-bak`s veto, transportation experts suggested resolution of the problem through “public discussions.” A source in the transportation societies community said, “Since both sides have starkly different views, one solution is for them to hold public forums to allow the public to make an informed judgment, and thereby confirm whether the estimated financial costs and aid measures are accurate before the National Assembly votes again on the Taxi Act.”

ryu@donga.com