Addressing Problem of Taxi Shortage

Er Dr Lee Bee Wah asked the Minister for Transport (a) how is the Ministry addressing the problem of taxi shortages at various locations during certain times; (b) whether the Ministry will consider implementing a monthly fixed Electronic Road Pricing (ERP) charge for taxis to encourage them to move in and out of the CBD freely; (c) if the Minister will update the House on standardising the taxi fare structure; and (d) whether

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there are plans to scrap the surcharges.

Since Taxi Availability standards were introduced in January 2013, the percentage of taxis on the roads during peak periods has increased from about 82% in 2012 to 87% in the first eight months of this year. This means that about 1,400 more taxis are available during peak periods. The percentage of taxis plying at least 250 km daily has increased from about 75% to 78% over the same period. The daily taxi utilisation rate or the proportion of total taxi mileage under hire, has increased from about 65% to 68%. In short, more taxis are plying the roads and more commuters are using them.

Taxis take up road space and contribute to traffic congestion. Hence, the right and fair thing to do is for taxis to similarly internalise the cost of congestion through ERP, just like every other vehicle on our roads, including public buses, cars and commercial vehicles. A monthly fixed charge seems like an attractive idea, but what should the charge be? If it is too high, no taxi driver will purchase it. If it is too low, taxis would contribute unfairly to congestion vis-à-vis other vehicles.

There is currently already the City Area Surcharge for taxi trips originating from the CBD between 5 pm and midnight every day. In addition, some taxi companies reimburse their drivers for the CBD ERP charges if they are unable to pick up a passenger within 15 minutes of entering the CBD. This is a practice to be encouraged.

LTA is still studying and discussing with stakeholders the harmonisation of the taxi fare structure. The issue is complicated as the fare structure fundamentally reflects the different rental costs of different taxis. And different stakeholders, ranging from commuters, taxi drivers to taxi companies, have different interests. For instance, from discussions, it is likely that if we harmonise the fare structure, taxi companies will level up the fares across their different taxi models. Rentals will also likely rise for drivers who are driving older taxis and paying lower rentals. I am not sure that commuters and taxi drivers would be pleased with this outcome. We will take more time to discuss with stakeholders.

On the issue of surcharges, they play an important role in better matching supply and demand when and where there is a persistent shortage of taxis, for example, at certain times of the day or in certain locations where it is financially less attractive for taxi drivers to ply. Surcharges give taxi drivers the incentive to do so. Therefore, while a surcharge system is by no means perfect and adds to the complexity of the fare structure, it may be necessary in order to ensure widespread availability of taxis. Many other cities, such as New York, London and Perth, also use them to regulate supply and demand.

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